UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2022~~March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-4858

INTERNATIONAL FLAVORS & FRAGRANCES INC.

(Exact name of registrant as specified in its charter)



New York						13-1432060
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

521 West 57th Street, New York, NY 10019-2960

200 Powder Mill Road, Wilmington, DE 19803-2907

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (212) 765-5500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange
on which registered

Common Stock, par value 12 1/2¢ per share

IFF

New York Stock Exchange

1.750% Senior Notes due 2024

IFF 24

New York Stock Exchange

1.800% Senior Notes due 2026

IFF 26

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☑	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

Number of shares of common stock outstanding as of ~~October 31, 2022: 254,962,253~~May 3, 2023: 255,091,358

INTERNATIONAL FLAVORS & FRAGRANCES INC.

TABLE OF CONTENTS


		PAGE
	PART I - Financial Information
ITEM 1.	Financial Statements

	Consolidated Balance Sheets - Se ~~ptember~~March ~~30, 2022~~3 1 , 202 3 and December 31, ~~2021~~20 2 2	1

	Consolidated Statements of (Lo ss )(Loss) Income and Comprehensive ~~Loss~~Income - Three ~~and~~ ~~Nine~~ Months Ended ~~September~~March ~~30, 2022~~3 1 , 202 3 and ~~2021~~20 2 2	2

	Consolidated Statements of Cash Flows - ~~Nine~~Three Months Ended ~~September~~March ~~30, 2022~~3 1 , 202 3 and ~~2021~~20 2 2	3

	Consolidated Statements of Shareholders’ Equity - Three ~~and Nine~~ Months Ended ~~September 30, 2022~~March 3 1 , 202 3 and ~~2021~~20 2 2	4

	Notes to Consolidated Financial Statements	65

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3229

ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	4840

ITEM 4.	Controls and Procedures	4840

	PART II - Other Information
ITEM 1.	Legal Proceedings	4941

ITEM 1A.	Risk Factors	4941

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4941

ITEM 6.	Exhibits	4942

Signatures		5043

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

INTERNATIONAL FLAVORS & FRAGRANCES INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)


(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	September 30, 2022		December 31, 2021		(DOLLARS IN MILLIONS)	March 31, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Current Assets:	Current Assets:					Current Assets:
Cash and cash equivalents	Cash and cash equivalents	$	538	$	711	Cash and cash equivalents	$	590	$	483
Restricted cash	Restricted cash	10		4		Restricted cash	16		10
Trade receivables (net of allowances of $57 and $46, respectively)		2,031		1,906
Trade receivables (net of allowances of $54 and $53, respectively)						Trade receivables (net of allowances of $54 and $53, respectively)	1,899		1,818
Inventories: Raw materials	Inventories: Raw materials	1,092		854		Inventories: Raw materials	1,006		1,073
Work in process	Work in process	403		287		Work in process	473		442
Finished goods	Finished goods	1,627		1,375		Finished goods	1,467		1,636
Total Inventories	Total Inventories	3,122		2,516		Total Inventories	2,946		3,151
Assets held for sale	Assets held for sale	—		1,122		Assets held for sale	1,202		1,200
Prepaid expenses and other current assets	Prepaid expenses and other current assets	793		728		Prepaid expenses and other current assets	789		770
Total Current Assets	Total Current Assets	6,494		6,987		Total Current Assets	7,442		7,432
Property, plant and equipment, at cost	Property, plant and equipment, at cost	6,033		6,161		Property, plant and equipment, at cost	6,309		6,180
Accumulated depreciation	Accumulated depreciation	(1,978)		(1,793)		Accumulated depreciation	(2,085)		(1,977)
Property, plant and equipment, net	Property, plant and equipment, net	4,055		4,368		Property, plant and equipment, net	4,224		4,203
Goodwill	Goodwill	13,305		16,414		Goodwill	13,458		13,355
Other intangible assets, net	Other intangible assets, net	9,386		10,506		Other intangible assets, net	8,968		9,082

Operating lease right-of-use assets	Operating lease right-of-use assets	634		767		Operating lease right-of-use assets	634		636
Other assets	Other assets	663		616		Other assets	744		699
Total Assets	Total Assets	$	34,537	$	39,658	Total Assets	$	35,470	$	35,407
LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:	Current Liabilities:					Current Liabilities:
Bank borrowings, overdrafts, and current portion of long-term debt	Bank borrowings, overdrafts, and current portion of long-term debt	$	308	$	308	Bank borrowings, overdrafts, and current portion of long-term debt	$	1,483	$	410
Commercial paper	Commercial paper	204		324		Commercial paper	588		187
Accounts payable	Accounts payable	1,527		1,532		Accounts payable	1,197		1,418
Accrued payroll and bonus	Accrued payroll and bonus	253		335		Accrued payroll and bonus	218		267
Dividends payable	Dividends payable	206		201		Dividends payable	207		206
Liabilities held for sale	Liabilities held for sale	—		101		Liabilities held for sale	216		212
Other current liabilities	Other current liabilities	1,128		832		Other current liabilities	965		1,028
Total Current Liabilities	Total Current Liabilities	3,626		3,633		Total Current Liabilities	4,874		3,728
Other Liabilities:	Other Liabilities:					Other Liabilities:
Long-term debt	Long-term debt	10,260		10,768		Long-term debt	9,220		10,373

Retirement liabilities	Retirement liabilities	354		385		Retirement liabilities	235		231
Deferred income taxes	Deferred income taxes	2,280		2,518		Deferred income taxes	2,229		2,265
Operating lease liabilities	Operating lease liabilities	556		670		Operating lease liabilities	569		565
Other liabilities	Other liabilities	472		462		Other liabilities	494		472
Total Other Liabilities	Total Other Liabilities	13,922		14,803		Total Other Liabilities	12,747		13,906
Commitments and Contingencies (Note 16)	Commitments and Contingencies (Note 16)					Commitments and Contingencies (Note 16)
Redeemable noncontrolling interests		68		105
Redeemable non-controlling interests						Redeemable non-controlling interests	59		59
Shareholders’ Equity:	Shareholders’ Equity:					Shareholders’ Equity:
Common stock $0.125 par value; 500,000,000 shares authorized; 275,726,629 shares issued as of September 30, 2022 and 275,726,629 shares issued as of December 31, 2021; and 254,949,630 and 254,573,984 shares outstanding as of September 30, 2022 and December 31, 2021, respectively		35		35
Common stock $0.125 par value; 500,000,000 shares authorized; 275,726,629 shares issued as of March 31, 2023 and 275,726,629 shares issued as of December 31, 2022; and 255,067,476 and 254,968,463 shares outstanding as of March 31, 2023 and December 31, 2022, respectively						Common stock $0.125 par value; 500,000,000 shares authorized; 275,726,629 shares issued as of March 31, 2023 and 275,726,629 shares issued as of December 31, 2022; and 255,067,476 and 254,968,463 shares outstanding as of March 31, 2023 and December 31, 2022, respectively	35		35
Capital in excess of par value	Capital in excess of par value	19,832		19,826		Capital in excess of par value	19,844		19,841
Retained earnings	Retained earnings	1,186		3,641		Retained earnings	739		955
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(3,187)		(1,423)		Accumulated other comprehensive loss	(1,887)		(2,169)
Treasury stock, at cost (20,776,999 and 21,152,645 shares as of September 30, 2022 and December 31, 2021, respectively)		(979)		(997)
Treasury stock, at cost (20,659,153 and 20,758,166 shares as of March 31, 2023 and December 31, 2022, respectively)						Treasury stock, at cost (20,659,153 and 20,758,166 shares as of March 31, 2023 and December 31, 2022, respectively)	(973)		(978)
Total Shareholders’ Equity	Total Shareholders’ Equity	16,887		21,082		Total Shareholders’ Equity	17,758		17,684
Noncontrolling interest		34		35
Total Shareholders’ Equity including Noncontrolling interest		16,921		21,117
Non-controlling interest						Non-controlling interest	32		30
Total Shareholders’ Equity including Non-controlling interest						Total Shareholders’ Equity including Non-controlling interest	17,790		17,714
Total Liabilities and Shareholders’ Equity	Total Liabilities and Shareholders’ Equity	$	34,537	$	39,658	Total Liabilities and Shareholders’ Equity	$	35,470	$	35,407

See Notes to Consolidated Financial Statements

Table of Contents

INTERNATIONAL FLAVORS & FRAGRANCES INC.

~~Consolidated Statements of (Loss) Income and Comprehensive Loss~~CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE INCOME

(Unaudited)


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
(AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)	(AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)	2022		2021		2022		2021		(AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)	2023		2022
Net sales	Net sales	$	3,063	$	3,071	$	9,596	$	8,625	Net sales	$	3,027	$	3,226
Cost of goods sold	Cost of goods sold	2,062		1,981		6,314		5,871		Cost of goods sold	2,063		2,081
Gross profit	Gross profit	1,001		1,090		3,282		2,754		Gross profit	964		1,145
Research and development expenses	Research and development expenses	145		156		460		463		Research and development expenses	161		157
Selling and administrative expenses	Selling and administrative expenses	413		436		1,328		1,299		Selling and administrative expenses	454		459
Amortization of acquisition-related intangibles	Amortization of acquisition-related intangibles	182		195		552		547		Amortization of acquisition-related intangibles	171		186
Impairment of goodwill		2,250		—		2,250		—
Impairment of long-lived assets		—		—		120		—

Restructuring and other charges	Restructuring and other charges	(4)		6		5		34		Restructuring and other charges	52		2
Gains on sales of fixed assets		—		(1)		(2)		(1)
Operating (loss) profit		(1,985)		298		(1,431)		412
Gains on sale of fixed assets										Gains on sale of fixed assets	(5)		—
Operating profit										Operating profit	131		341
Interest expense	Interest expense	83		74		232		216		Interest expense	111		72

Other income, net		(33)		(26)		(43)		(44)
(Loss) Income before taxes		(2,035)		250		(1,620)		240
Other expense (income), net										Other expense (income), net	6		(16)
Income before taxes										Income before taxes	14		285
Provision for income taxes	Provision for income taxes	160		53		220		53		Provision for income taxes	22		39
Net (loss) income	Net (loss) income	(2,195)		197		(1,840)		187		Net (loss) income	(8)		246
Net income attributable to noncontrolling interests		2		3		6		7
Net income attributable to non-controlling interests										Net income attributable to non-controlling interests	1		2
Net (loss) income attributable to IFF shareholders	Net (loss) income attributable to IFF shareholders	$	(2,197)	$	194	$	(1,846)	$	180	Net (loss) income attributable to IFF shareholders	$	(9)	$	244

Net (loss) income per share - basic	Net (loss) income per share - basic	$	(8.60)	$	0.76	$	(7.22)	$	0.75	Net (loss) income per share - basic	$	(0.04)	$	0.96
Net (loss) income per share - diluted	Net (loss) income per share - diluted	$	(8.60)	$	0.76	$	(7.22)	$	0.75	Net (loss) income per share - diluted	$	(0.04)	$	0.96
Average number of shares outstanding - basic	Average number of shares outstanding - basic	255		254		255		239		Average number of shares outstanding - basic	255		255
Average number of shares outstanding - diluted	Average number of shares outstanding - diluted	255		255		255		239		Average number of shares outstanding - diluted	255		255

Statements of Comprehensive Loss
Statements of Comprehensive Income										Statements of Comprehensive Income
Net (loss) income	Net (loss) income	$	(2,195)	$	197	$	(1,840)	$	187	Net (loss) income	$	(8)	$	246
Other comprehensive loss, after tax:
Other comprehensive income (loss), after tax:										Other comprehensive income (loss), after tax:
Foreign currency translation adjustments	Foreign currency translation adjustments	(982)		(339)		(1,770)		(493)		Foreign currency translation adjustments	284		(199)
Gains on derivatives qualifying as hedges		—		1		—		7

Pension and postretirement liability adjustment	Pension and postretirement liability adjustment	5		(8)		6		4		Pension and postretirement liability adjustment	(2)		—
Other comprehensive loss		(977)		(346)		(1,764)		(482)
Comprehensive loss		(3,172)		(149)		(3,604)		(295)
Net income attributable to noncontrolling interests		2		3		6		7
Comprehensive loss attributable to IFF shareholders		$	(3,174)	$	(152)	$	(3,610)	$	(302)
Other comprehensive income (loss)										Other comprehensive income (loss)	282		(199)
Comprehensive income										Comprehensive income	274		47
Net income attributable to non-controlling interests										Net income attributable to non-controlling interests	1		2
Comprehensive income attributable to IFF shareholders										Comprehensive income attributable to IFF shareholders	$	273	$	45

See Notes to Consolidated Financial Statements

Table of Contents

INTERNATIONAL FLAVORS & FRAGRANCES INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	2022		2021		(DOLLARS IN MILLIONS)	2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net (loss) income	Net (loss) income	$	(1,840)	$	187	Net (loss) income	$	(8)	$	246
Adjustments to reconcile to net cash provided by operating activities
Adjustments to reconcile to net cash provided by (used in) operating activities						Adjustments to reconcile to net cash provided by (used in) operating activities
Depreciation and amortization	Depreciation and amortization	897		861		Depreciation and amortization	276		303
Deferred income taxes	Deferred income taxes	(222)		(148)		Deferred income taxes	(28)		(65)
Gains on sales of fixed assets		(2)		(1)
Gain on business divestiture		(14)		—
Gains on sale of fixed assets						Gains on sale of fixed assets	(5)		—
Losses on business divestitures						Losses on business divestitures	14		—
Stock-based compensation	Stock-based compensation	37		44		Stock-based compensation	12		9
Pension contributions	Pension contributions	(25)		(21)		Pension contributions	(7)		(8)

Amortization of inventory step-up		—		363
Impairment of goodwill		2,250		—
Impairment of long-lived assets		120		—

Changes in assets and liabilities, net of acquisitions:	Changes in assets and liabilities, net of acquisitions:					Changes in assets and liabilities, net of acquisitions:
Trade receivables	Trade receivables	(309)		(214)		Trade receivables	(63)		(272)
Inventories	Inventories	(808)		(230)		Inventories	219		(311)
Accounts payable	Accounts payable	111		256		Accounts payable	(144)		178
Accruals for incentive compensation	Accruals for incentive compensation	(56)		43		Accruals for incentive compensation	(70)		(101)
Other current payables and accrued expenses	Other current payables and accrued expenses	202		99		Other current payables and accrued expenses	(51)		39
Other assets/liabilities, net	Other assets/liabilities, net	(152)		(113)		Other assets/liabilities, net	(18)		(22)
Net cash provided by operating activities		189		1,126
Net cash provided by (used in) operating activities						Net cash provided by (used in) operating activities	127		(4)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Cash paid for acquisitions, net of cash received		(110)		—

Additions to property, plant and equipment	Additions to property, plant and equipment	(344)		(242)		Additions to property, plant and equipment	(175)		(132)
Additions to intangible assets	Additions to intangible assets	(2)		(4)		Additions to intangible assets	—		(2)

Proceeds from disposal of assets	Proceeds from disposal of assets	1		13		Proceeds from disposal of assets	7		2
Cash provided by the Merger with N&B	Cash provided by the Merger with N&B	11		193		Cash provided by the Merger with N&B	—		11
Proceeds from unwinding of derivative instruments		173		—

Net proceeds received from business divestiture	Net proceeds received from business divestiture	1,158		115		Net proceeds received from business divestiture	1		—
Net cash provided by investing activities		887		75
Net cash used in investing activities						Net cash used in investing activities	(167)		(121)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Cash dividends paid to shareholders	Cash dividends paid to shareholders	(604)		(466)		Cash dividends paid to shareholders	(206)		(201)
Increase (decrease) in revolving credit facility and short-term borrowings	Increase (decrease) in revolving credit facility and short-term borrowings	2		(105)		Increase (decrease) in revolving credit facility and short-term borrowings	(100)		1
Proceeds from issuance of commercial paper (maturities after three months)	Proceeds from issuance of commercial paper (maturities after three months)	160		—		Proceeds from issuance of commercial paper (maturities after three months)	—		155
Repayments of commercial paper (maturities after three months)	Repayments of commercial paper (maturities after three months)	(235)		—		Repayments of commercial paper (maturities after three months)	—		(75)
Net (repayments) borrowings of commercial paper (maturities less than three months)		(52)		200

Repayments of long-term debt		(300)		(628)
Proceeds from issuance of long-term debt		—		3
Contingent consideration paid		—		(14)
Purchases of redeemable noncontrolling interest		(39)		—
Purchases of noncontrolling interest		(6)		—
Net borrowings of commercial paper (maturities less than three months)						Net borrowings of commercial paper (maturities less than three months)	393		227
Deferred financing costs						Deferred financing costs	(2)		—

Proceeds from issuance of stock in connection with stock options		7		8

Employee withholding taxes paid	Employee withholding taxes paid	(20)		(20)		Employee withholding taxes paid	(6)		(13)

Net cash used in financing activities		(1,087)		(1,022)
Other, net						Other, net	(1)		1
Net cash provided by financing activities						Net cash provided by financing activities	78		95
Effect of exchange rate changes on cash, cash equivalents and restricted cash	Effect of exchange rate changes on cash, cash equivalents and restricted cash	(150)		(44)		Effect of exchange rate changes on cash, cash equivalents and restricted cash	27		(24)
Net change in cash, cash equivalents and restricted cash	Net change in cash, cash equivalents and restricted cash	(161)		135		Net change in cash, cash equivalents and restricted cash	65		(54)
Cash, cash equivalents and restricted cash at beginning of year	Cash, cash equivalents and restricted cash at beginning of year	716		660		Cash, cash equivalents and restricted cash at beginning of year	552		716
Cash, cash equivalents and restricted cash at end of period	Cash, cash equivalents and restricted cash at end of period	$	555	$	795	Cash, cash equivalents and restricted cash at end of period	$	617	$	662
Supplemental Disclosures:	Supplemental Disclosures:					Supplemental Disclosures:
Interest paid, net of amounts capitalized	Interest paid, net of amounts capitalized	$	199	$	216	Interest paid, net of amounts capitalized	$	66	$	45
Income taxes paid	Income taxes paid	276		198		Income taxes paid	227		78
Accrued capital expenditures	Accrued capital expenditures	93		44		Accrued capital expenditures	71		64

See Notes to Consolidated Financial Statements

Table of Contents

INTERNATIONAL FLAVORS & FRAGRANCES INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)


(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	Common stock			Capital in excess of par value		Retained earnings		Accumulated other comprehensive (loss) income		Treasury stock			Non-controlling interest		Total		(DOLLARS IN MILLIONS)	Common stock			Capital in excess of par value		Retained earnings		Accumulated other comprehensive (loss) income		Treasury stock			Non-controlling interest		Total
		Shares	Cost								Shares	Cost							Shares	Cost								Shares	Cost
Balance at June 30, 2021		270,266,598	$	34	$	19,800	$	3,759	$	(834)	(21,216,057)	$	(998)	$	39	$	21,800
Balance at January 1, 2022																		Balance at January 1, 2022	275,726,629	$	35	$	19,826	$	3,641	$	(1,423)	(21,152,645)	$	(997)	$	35	$	21,117
Net income	Net income						194							2		196		Net income						244							2		246

Cumulative translation adjustment	Cumulative translation adjustment								(339)							(339)		Cumulative translation adjustment								(199)							(199)
Gains on derivatives qualifying as hedges; net of tax of $0									1							1
Pension liability and postretirement adjustment; net of tax of $0									(8)							(8)

Cash dividends declared ($0.79 per share)	Cash dividends declared ($0.79 per share)						(201)									(201)		Cash dividends declared ($0.79 per share)						(202)									(202)
Stock options/SSARs	Stock options/SSARs				—						25,063	1				1		Stock options/SSARs				9						80,153	4				13

Vested restricted stock units and awards	Vested restricted stock units and awards				2						6,864	(1)				1		Vested restricted stock units and awards				(22)						150,610	7				(15)
Stock-based compensation	Stock-based compensation				17											17		Stock-based compensation				9											9
Impact of N&B Merger		—	—		—									8		8
Conversion of tangible equity units		5,460,031	1		(1)											—
Redeemable NCI					(1)											(1)
Dividends paid on noncontrolling interest and Other							—							(2)		(2)
Balance at September 30, 2021		275,726,629	$	35	$	19,817	$	3,752	$	(1,180)	(21,184,130)	$	(998)	$	47	$	21,473
Purchases of NCI																		Purchases of NCI				1									(5)		(4)

Balance at March 31, 2022																		Balance at March 31, 2022	275,726,629	$	35	$	19,823	$	3,683	$	(1,622)	(20,921,882)	$	(986)	$	32	$	20,965


(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	Common stock			Capital in excess of par value		Retained earnings		Accumulated other comprehensive (loss) income		Treasury stock			Non-controlling interest		Total		(DOLLARS IN MILLIONS)	Common stock			Capital in excess of par value		Retained earnings		Accumulated other comprehensive (loss) income		Treasury stock			Non-controlling interest		Total
		Shares	Cost								Shares	Cost							Shares	Cost								Shares	Cost
Balance at June 30, 2022		275,726,629	$	35	$	19,826	$	3,589	$	(2,210)	(20,781,898)	$	(980)	$	33	$	20,293
Net loss							(2,197)							1		(2,196)
Balance at January 1, 2023																		Balance at January 1, 2023	275,726,629	$	35	$	19,841	$	955	$	(2,169)	(20,758,166)	$	(978)	$	30	$	17,714
Net (loss)																		Net (loss)						(9)							1		(8)

Cumulative translation adjustment	Cumulative translation adjustment								(982)							(982)		Cumulative translation adjustment								284							284

Pension liability and postretirement adjustment; net of tax of $(1)									5							5
Pension liability and postretirement adjustment; net of tax of $0																		Pension liability and postretirement adjustment; net of tax of $0								(2)							(2)
Cash dividends declared ($0.81 per share)	Cash dividends declared ($0.81 per share)						(206)									(206)		Cash dividends declared ($0.81 per share)						(207)									(207)
Stock options/SSARs	Stock options/SSARs				1						1,551	—				1		Stock options/SSARs				(5)						55,617	3				(2)

Vested restricted stock units and awards	Vested restricted stock units and awards				(1)						3,348	1				—		Vested restricted stock units and awards				(4)						43,396	2				(2)
Stock-based compensation	Stock-based compensation				12											12		Stock-based compensation				12											12

Redeemable NCI					(6)											(6)

Balance at September 30, 2022		275,726,629	$	35	$	19,832	$	1,186	$	(3,187)	(20,776,999)	$	(979)	$	34	$	16,921
Dividends paid on non-controlling interest and Other																		Dividends paid on non-controlling interest and Other													1		1
Balance at March 31, 2023																		Balance at March 31, 2023	275,726,629	$	35	$	19,844	$	739	$	(1,887)	(20,659,153)	$	(973)	$	32	$	17,790

See Notes to Consolidated Financial Statements

~~Table of Contents~~

(DOLLARS IN MILLIONS) Common
stock Capital in
excess of
par value Retained
earnings Accumulated other
comprehensive
(loss) income Treasury stock Non-controlling
interest Total
Shares Cost Shares Cost
Balance at January 1, 2021 128,526,137 $ 16 $ 3,853 $ 4,156 $ (698) (21,588,147) $ (1,017) $ 12 $ 6,322
Net income 180 3 183
Cumulative translation adjustment (493) (493)
Gains on derivatives qualifying as hedges; net of tax of $1 7 7
Pension liability and postretirement adjustment; net of tax of $(1) 4 4
Cash dividends declared ($2.33 per share) (584) (584)
Stock options/SSARs 2 139,698 7 9
Vested restricted stock units and awards (16) 264,319 12 (4)
Stock-based compensation 44 44
Impact of N&B Merger 141,740,461 18 15,936 34 15,988
Conversion of tangible equity units 5,460,031 1 (1) —
Redeemable NCI (1) (1)
Dividends paid on noncontrolling interest and Other (2) (2)
Balance at September 30, 2021 275,726,629 $ 35 $ 19,817 $ 3,752 $ (1,180) (21,184,130) $ (998) $ 47 $ 21,473

(DOLLARS IN MILLIONS) Common
stock Capital in
excess of
par value Retained
earnings Accumulated other
comprehensive
(loss) income Treasury stock Non-controlling
interest Total
Shares Cost Shares Cost
Balance at January 1, 2022 275,726,629 $ 35 $ 19,826 $ 3,641 $ (1,423) (21,152,645) $ (997) $ 35 $ 21,117
Net loss (1,846) 3 (1,843)
Cumulative translation adjustment (1,770) (1,770)
Pension liability and postretirement adjustment; net of tax of $(2) 6 6
Cash dividends declared ($2.39 per share) (609) (609)
Stock options/SSARs 11 85,728 4 15
Vested restricted stock units and awards (39) 289,918 14 (25)
Stock-based compensation 37 37
Purchase of NCI 1 (6) (5)
Redeemable NCI (4) (4)
Dividends paid on noncontrolling interest and Other 2 2
Balance at September 30, 2022 275,726,629 $ 35 $ 19,832 $ 1,186 $ (3,187) (20,776,999) $ (979) $ 34 $ 16,921

~~See Notes to Consolidated Financial Statements~~

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INTERNATIONAL FLAVORS & FRAGRANCES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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

Nature of Operations

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

Basis of Presentation

The accompanying interim Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the related notes included in our ~~2021~~2022 Annual Report on Form 10-K (“~~2021~~2022 Form 10-K”).

The interim Consolidated Financial Statements are unaudited. In addition, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States of America have been condensed or omitted, if not materially different from the ~~2021~~2022 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.

On February 1, 2021 (the “Closing Date”), pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), the Company completed the combination (the “Merger”) of IFF and DuPont de Nemours, Inc (“DuPont”) nutrition and biosciences business (the “N&B Business”), which had been transferred to Nutrition and Biosciences, Inc., a Delaware corporation and wholly owned subsidiary of DuPont (“N&B”) in a Reverse Morris Trust transaction.See Note 3 for additional information. As a result, the Company’s Consolidated Financial Statements for the three and nine months ended September 30, 2022 reflect the results of N&B for the full three and nine months in the period ended September 30, 2022, respectively, whereas the three and nine months ended September 30, 2021 reflect three and eight months of results of N&B in the period ended September 30, 2021, respectively.

Reporting Periods

The Company uses a calendar year of the twelve-month period from January 1 to December 31.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) 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 current economic implications of the novel coronavirus (“COVID-19”), the ~~recent~~ events in Russia and Ukraine, and the ongoing adverse macroeconomic impacts on our critical and significant accounting estimates, including estimates associated with future cash flows that are used in assessing the risk of impairment of certain assets. Actual results could differ from those estimates.

Cash, Cash Equivalents and Restricted Cash

Cash, cash equivalents and restricted cash reported in the Company’s balance sheet as of ~~September 30,~~March 31, 2023, December 31, 2022, March 31, 2022 and December 31, 2021 ~~September 30, 2021 and December 31, 2020~~ were as follows:


(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	September 30, 2022		December 31, 2021		September 30, 2021		December 31, 2020		(DOLLARS IN MILLIONS)	March 31, 2023		December 31, 2022		March 31, 2022		December 31, 2021
Current assets	Current assets									Current assets
Cash and cash equivalents	Cash and cash equivalents	$	538	$	711	$	672	$	650	Cash and cash equivalents	$	590	$	483	$	657	$	711
Cash and cash equivalents included in Assets held for sale										Cash and cash equivalents included in Assets held for sale	4		52		—		—
Restricted cash	Restricted cash	10		4		122		7		Restricted cash	16		10		4		4
Noncurrent assets
Non-current assets										Non-current assets
Restricted cash included in Other assets	Restricted cash included in Other assets	7		1		1		3		Restricted cash included in Other assets	7		7		1		1
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash	$	555	$	716	$	795	$	660	Cash, cash equivalents and restricted cash	$	617	$	552	$	662	$	716

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Accounts Receivable

The Company has various factoring agreements in the U.S. and The Netherlands under which it can factor up to approximately ~~$250~~€250 million in ~~receivables.~~receivables (“Company’s own factoring agreements”). In addition, the Company ~~has~~utilizes factoring agreements sponsored by certain customers. Under all of the arrangements, the Company sells the receivables on a non-recourse basis to unrelated financial institutions and accounts for the transactions as a sale of receivables. The applicable receivables are removed from the Company’s Consolidated Balance Sheets when the cash proceeds are received by the Company.

The ~~impact on cash flows from operating activities from participating in these programs was~~Company sold a ~~decrease~~total of approximately ~~$24~~$445 million and $333 million of receivables under the Company’s own factoring agreements and customer sponsored factoring agreements for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and an increase of approximately $40 million for the nine months ended September 30, 2021.~~respectively. The cost of participating in these programs was approximately $3$5 million and $2$1 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively, and ~~was~~is included as a component of interest expense. Under the Company’s own factoring agreements, it sold approximately $6$197 million and $5$87 million of receivables for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, respectively. The outstanding principal amounts of receivables under the Company’s own factoring agreements amounted to approximately $163 million and ~~2021,~~$157 million as of March 31, 2023 and December 31, 2022, respectively. The proceeds from the sales of receivables are included in net cash from operating activities in the Consolidated Statements of Cash Flows.

Revenue Recognition

The Company recognizes revenue from contracts with customers when ~~control~~the contract or purchase order has received approval and commitment from both parties, has the rights of the ~~promised goods~~parties and payment terms (which can vary by customer) identified, has commercial substance, collectability of consideration is ~~transferred to its customers in an amount that~~probable, and control has transferred. The revenue recognized reflects the consideration itthe Company expects to be entitled to in exchange for those goods. Sales, value added, and other taxes the Company collects are excluded from revenues. The Company receives payment in accordance with standard customer terms.

Sales are reduced, at the time revenue is recognized, for applicable discounts, rebates and sales allowances based on historical experience. Related accruals are included in Other current liabilities in the accompanying Consolidated Balance Sheets. The Company considers shipping and handling activities undertaken after the customer has obtained control of the related goods as a fulfillment activity. Net sales include shipping and handling charges billed to customers. Cost of goods sold includes all costs incurred in connection with shipping and handling.

See Note 12 for further details on revenues disaggregated by segment.

Contract Assets and Liabilities

With respect to a small number of contracts for the sale of compounds, the Company has an “enforceable right to payment for performance to date” and as the products do not have an alternative use, the Company recognizes revenue for these contracts over time and records a contract asset using the output method. The output method recognizes revenue on the basis of direct measurements of the value to the customer of the goods or services transferred to date relative to the remaining goods or services promised under the contract.

As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the Company’s gross accounts receivable was ~~$2.088~~$1.953 billion and ~~$1.952~~$1.871 billion, respectively. The Company’s contract assets and contract liabilities as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 were not material.

Expected Credit Losses

The Company is exposed to credit losses primarily through its sales of products. To determine the appropriate allowance for expected credit losses, the Company considers certain credit quality indicators, such as aging, collection history, and creditworthiness of debtors. Regional and Global Credit committees review and approve specific customer allowance reserves. The allowance for expected credit losses is primarily based on two primary factors: i) the aging of the different categories of trade receivables, and ii) a specific reserve for accounts identified as uncollectible.

The Company also considers current and future economic conditions in the determination of the allowance. At ~~September 30, 2022,~~March 31, 2023, the Company reported ~~$2.031~~$1.899 billion of trade receivables, net of allowances of ~~$57~~$54 million. Based on the aging analysis as of ~~September 30, 2022, approximately~~March 31, 2023, less than 1% of the Company’s accounts receivable were past due by over 365 days based on the payment terms of the invoice.

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The following is a rollforward of the Company’s allowances for bad debts for the ~~nine~~three months ended ~~September 30, 2022:~~March 31, 2023:


(DOLLARS IN MILLIONS)	Allowances for Bad Debts
Balance at December 31, ~~2021~~2022	$	4653
Bad debt expense(1)	171


~~Foreign exchange~~	~~(6)~~
Balance at ~~September 30, 2022~~March 31, 2023	$	5754

_______________________

(1)The bad debt expense included approximately ~~$11~~$9 million related to expected credit losses on receivables from certain customers in Egypt, offset by approximately $8 million of reversals of allowances on receivables from customers located in Russia and ~~Ukraine (for export and domestic sales) due to recent events in those countries.~~Ukraine. The Company will continue to evaluate its credit exposure related to Egypt, Russia and Ukraine.

~~Table of Contents~~

Long-Lived Assets

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

Goodwill

Goodwill represents the difference between the total purchase price and the fair value of identifiable assets and liabilities acquired in business acquisitions.

The Company tests goodwill for impairment at the reporting unit level as of November 30 every year, or more frequently if events or changes in circumstances indicate the asset might be impaired. A reporting unit is an operating segment or one level below an operating segment (referred to as a component) to which goodwill is assigned when initially recorded.

The Company identifies its reporting units by assessing whether the components of its reporting segments constitute businesses for which discrete financial information is available and management of each reporting unit regularly reviews the operating results of those components. The Company determined that it has ~~identified~~ six reporting units under the Nourish, Health & Biosciences, Scent and Pharma Solutions segments: (1) Nourish, (2) Fragrance Compounds, (3) Fragrance Ingredients, (4) Cosmetic Actives, (5) Health & Biosciences and (6) Pharma Solutions. These reporting units were determined based on the level at which the performance is measured and reviewed by segment management. In cases where the components of an operating segment have similar economic ~~characteristics;~~characteristics, they are aggregated into a single reporting unit.

The Company determined that the carrying value of the Health & Biosciences reporting unit exceeded its fair value and recorded a goodwill impairment charge of $2.250 billion in the Consolidated Statements of (Loss) Income and Comprehensive Loss for the three and nine months ended September 30, 2022 (see Note 6 for additional information).

~~Recent~~ Events in Russia and Ukraine

The Company maintains operations in both Russia and Ukraine and, additionally, exports products to customers in Russia and Ukraine from operations outside the region. In response to the events in Ukraine, the Company has limited the production and supply of ingredients in and to Russia to only those that meet the essential needs of people, including food, hygiene and medicine.

~~Impairment of Long-Lived Assets~~

During the second quarter of 2022, the sales and margins declined for certain entities within Russia due to supply chain issues, reduced product demand and exchange rate volatility. Further, it was determined that such declines in operating performance were not expected to reverse in the near future. Additionally, future expected growth is expected to be limited given operating conditions in Russia, which inhibit the required future investment.

In connection with uncertainties related to the Company’s operations in Russia and Ukraine, the Company updated its analysis of the undiscounted cash flows of the applicable asset groups to determine if the cash flows exceeded the carrying values of the applicable asset groups. With respect to an asset group in the Nourish segment, that manufactures and sells in Russia and related markets, it was determined that the undiscounted cash flows were insufficient to cover the carrying value and that an impairment charge was required to write-down the long-lived assets to their fair values. The fair value of such asset group was determined based on a discounted cash flow approach which involved estimating the future cash flows for the business discount to their present values. The discount rate used in the determination of such fair value was based on consideration of the risks inherent in the cash flows and market as of the valuation date.

As a result of this assessment, the Company recognized an impairment charge of $120 million in the Consolidated Statements of (Loss) Income and Comprehensive Loss during the second quarter of 2022, which was allocated on a pro rata basis to intangible assets and property, plant and equipment within the asset group in the amounts of approximately $92 million and $28 million, respectively.

Allowances for Bad Debts

As ~~indicated above, through the nine months ended September 30, 2022,~~of March 31, 2023, the Company ~~also recorded~~had a ~~charge~~reserve of approximately ~~$11~~$3 million related to expected credit losses on receivables from customers located in Russia and ~~Ukraine (for export and domestic sales) due to recent events in those countries.~~Ukraine. The Company will continue to evaluate its credit exposure related to Russia and Ukraine.

~~Table of Contents~~

Recent Accounting Pronouncements

In ~~November 2021,~~December 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) ~~2021-10, “Government Assistance~~2022-06, “Reference Rate Reform (Topic ~~832)~~848): ~~Disclosures by Business Entities about Government Assistance.~~Deferral of the Sunset Date of Topic 848.” The ASU was issued to provide an update on ASU 2020-04 and ASU 2021-01 that were issued in March 2020 and January 2021, respectively, which provided optional accounting guidance for a limited period of time to ease the potential burden in accounting for reference rate reform. The guidance provides optional expedients and exceptions to existing accounting requirements for contract modifications and hedge accounting related to transitioning from discontinued reference rates, such as London Interbank Offered Rate (“LIBOR”), to alternative reference rates, if certain criteria are met. With the issuance of ASU 2022-06, the sunset date of Topic 848 has been deferred from December 31, 2022 to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. On March 23, 2023, the Company amended certain existing debt agreements where the interest rate benchmark was updated from LIBOR to the Secured Overnight Financing Rate (“Term SOFR”). The Company had adopted Topic 848 and also applied it to its recent amendments of its debt agreements. See Note 8 for additional information on the amendments to the debt agreements.

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In September 2022, the FASB issued ASU 2022-04, “Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” The ASU requires ~~annual disclosures~~that a buyer in a supplier finance program disclose sufficient information about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This guidance is effective for all entities for annual periods beginning after December 15, 2021the program to allow users of the financial statements to understand the program’s nature, activity during the period, changes from period to period and ~~early adoption is permitted.~~potential magnitude. The ~~Company is currently evaluating the impact of this guidance, but does not expect this guidance to have a material impact on~~buyer should disclose qualitative and quantitative information about its ~~Consolidated Financial Statements.~~

~~In October 2021, the FASB issued ASU 2021-08, “Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers.”~~supplier finance programs. The ASU ~~is intended~~requires the buyer’s annual disclosure to ~~provide specific guidance on how to recognize~~include a rollforward of the obligations under the supplier finance programs during the annual period, including the amount of obligations confirmed and measure acquired contract assets and liabilities from revenue contracts in a business combination. An acquirer needs to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. To achieve this, an acquirer may assess how the acquiree applied Topic 606 to determine what to record for the acquired revenue contracts.subsequently paid. This guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023, and early adoption is ~~permitted, including adoption in an interim period.~~permitted. The Company ~~early~~has adopted ~~ASU 2021-08 during the second quarter of 2022. The adoption of the~~this guidance on January 1, 2023, which did not have a material impact on ~~the~~its Consolidated Financial Statements. As of March 31, 2023, the Company did not have any obligations under supplier finance programs.

NOTE 2. NET (LOSS) INCOME PER SHARE

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

Three Months Ended September 30, Nine Months Ended September 30,
(AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS) 2022 2021 2022 2021
Net (Loss) Income
Net (loss) income attributable to IFF shareholders $ (2,197) $ 194 $ (1,846) $ 180
Adjustment related to (increase) decrease in redemption value of redeemable noncontrolling interests in excess of earnings allocated 1 (1) 3 (1)
Net (loss) income available to IFF shareholders $ (2,196) $ 193 $ (1,843) $ 179
Shares
Weighted average common shares outstanding (basic)(1)
255 254 255 239
Adjustment for assumed dilution(2):
Stock options and restricted stock awards — 1 — —
Weighted average shares assuming dilution (diluted) 255 255 255 239
Net (Loss) Income per Share
Net (loss) income per share - basic(3)
$ (8.60) $ 0.76 $ (7.22) $ 0.75
Net (loss) income per share - diluted(3)
(8.60) 0.76 (7.22) 0.75
~~_______________________~~

~~(1)~~On September 15, 2021, additional shares of IFF’s common stock were issued in settlement of the stock purchase contract (“SPC”) portion of the tangible equity units (“TEUs”). See below for additional information.

~~(2)Effect of dilutive securities includes dilution under stock plans and incremental impact of TEUs. See below for additional information.~~

~~(3)For the three and nine months ended September 30, 2022, the basic and diluted net loss per share cannot be recalculated based on the information presented in the table above due to rounding.~~

As of the effective time of the Merger, each issued and outstanding share of common stock of N&B (except for shares of common stock of N&B held by N&B as treasury stock or by DuPont, which were canceled and ceased to exist and no consideration was delivered in exchange therefor) was converted into the right to receive one share of common stock of IFF. The Merger was completed in exchange for 141,740,461 shares of IFF common stock, par value $0.125 per share (or cash payment in lieu of fractional shares), which had been approved in the special shareholder meeting that occurred on August 27, 2020 where IFF shareholders voted to approve the issuance of shares of IFF common stock in connection with the N&B Transaction, pursuant to the Merger Agreement. The shares issued in the Merger represented approximately 55.4% of the common stock of IFF on a fully diluted basis, after giving effect to the Merger, as of February 1, 2021.

~~Table of Contents~~


	Three Months Ended March 31,
(AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS)	2023		2022
Net (Loss) Income


Net (loss) income available to IFF shareholders	$	(9)	$	244
Shares
Weighted average common shares outstanding (basic)	255		255



Weighted average shares assuming dilution (diluted)	255		255

Net (Loss) Income per Share
Net (loss) income per share - basic	$	(0.04)	$	0.96
Net (loss) income per share - diluted	(0.04)		0.96

The Company declared a quarterly dividend to its shareholders of $0.81 and $0.79 per share for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively. For the nine months ended September 30, 2022 and 2021, the Company declared quarterly dividends to its shareholders totaling $2.39 and $2.33,~~ respectively.

There were approximately 0.3 ~~million and 0.4~~ million potentially dilutive securities excluded from the computation of diluted net loss per share for the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023 because there was a net loss attributable to IFF for the ~~periods~~period and, as such, the inclusion of these securities would have been anti-dilutive.

For the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, there were approximately ~~0.3~~0.4 million ~~stock options or stock-settled appreciation rights (“SSARs”)~~and 0.2 million share equivalents, respectively, that had an anti-dilutive effect and therefore were excluded from the computation of diluted net ~~loss~~(loss) income per share. ~~There were no stock options or SSARs excluded from the computation of diluted net income per share for the three and nine months ended September 30, 2021.~~

The Company issued 16,500,000 TEUs, consisting of a prepaid SPC and a senior amortizing note, for net proceeds of $800 million on September 17, 2018. On September 14, 2021, the Company notified holders of the TEUs that the final settlement rate in respect of each SPC was 0.330911 shares of IFF’s common stock. On September 15, 2021, 5,460,031 shares of IFF's common stock were issued in settlement of the SPCs. The SPC conversion factor is based on the 20 day volume-weighted average price (“VWAP”) per share of the Company’s common stock. For purposes of calculating basic and diluted net income per share, the settlement rate of 0.330911 shares per SPC, the final settlement rate, on September 30, 2021 was used.

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

The Company did not present the two-class method since there was no difference between basic net (loss) income per share for both unrestricted common shareholders and PRSU shareholders for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022. There was no difference between diluted net loss per share for both unrestricted common shareholders and PRSU shareholders for the three ~~and nine~~ months ended ~~September 30, 2022.~~March 31, 2023. The difference between diluted net income per share for both unrestricted common shareholders and PRSU shareholders for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 was less than $0.01 per share. In addition, the number of PRSUs outstanding as of ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ was not material. Net loss allocated to such PRSUs was not material for the three ~~and nine~~ months ended ~~September 30, 2022 and net~~March 31, 2023. Net income allocated to such PRSUs was not material for the three ~~and nine~~ months ended ~~September 30, 2021.~~

~~NOTE 3. ACQUISITIONS~~

~~Acquisition of Health Wright Products~~

On April 1, 2022 (“Acquisition Date”), the Company completed its acquisition of Health Wright Products, Inc. (“Health Wright”). IFF acquired 100% of the equity of Health Wright pursuant to a purchase agreement entered into on February 16,March 31, 2022. Health Wright is known in the consumer Health and Nutrition industries for providing high quality nutritional supplements. The acquisition was made in order to strengthen formulation and finished format capabilities to IFF’s Health & Biosciences probiotics, natural extracts and botanical businesses.

The acquisition was accounted for under the purchase method. The fair value of consideration transferred was approximately $157 million, including cash and estimated contingent consideration of $31 million. The preliminary purchase price allocation has been performed and resulted in intangible assets of approximately $75 million, and approximately $45 million of goodwill (which is deductible for tax purposes). The intangible assets primarily consisted of customer relationships of approximately $74 million that have been fair valued using the Multi-Period Excess Earning Method and which are being amortized over a period of approximately 19 years. The purchase price allocation is preliminary and is expected to be completed within the measurement period.

~~No pro forma information for 2022 was presented as the acquisition was not material to the Consolidated Financial Statements.~~

~~Transaction with N&B~~

On February 1, 2021, IFF completed the Merger with N&B. The aggregate purchase price consideration paid to acquire N&B was $15.942 billion. Refer to Note 3 of the Company's 2021 Form 10-K for additional information.

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~~Pro Forma Financial Information~~

The following unaudited pro forma financial information presents the combined results of operations of IFF and N&B as if the Merger had been completed as of January 1, 2020. The unaudited pro forma financial information is presented for informational purposes and is not indicative of the results of operations that would have been achieved if the Merger and related borrowings had taken place on January 1, 2020, nor are they indicative of future results. The unaudited pro forma financial information for the nine months ended September 30, 2021 includes IFF results, including the post-Merger results of N&B, since February 1, 2021, and pre-Merger results of N&B for the period January 1, 2021 through January 31, 2021.

~~The unaudited pro forma results for the nine months ended September 30, 2021 were as follows:~~


~~(DOLLARS IN MILLIONS)~~	~~Nine Months Ended September 30, 2021~~
~~Unaudited pro forma net sales~~	$	~~9,132~~
~~Unaudited pro forma net income attributable to the Company~~	~~593~~

The unaudited pro forma results for all periods include adjustments made to account for certain costs and transactions that would have been incurred had the Merger been completed as of January 1, 2020, including amortization charges for acquired intangibles assets, adjustments for transaction costs, adjustments for depreciation expense for property, plant and equipment, inventory step-up and adjustments to interest expense. These adjustments are net of any applicable tax impact and were included to arrive at the pro forma results above.

NOTE 3. BUSINESS DIVESTITURE

Divestiture of Microbial Control

The Company completed the divestiture of the Microbial Control business unit on July 1, 2022, which was acquired as part of the Company’s merger with Nutrition and Biosciences, Inc. (“N&B”), a wholly-owned subsidiary of DuPont, in 2021 (the “Merger”), and received net cash proceeds of approximately $1.169 billion. The Company also entered into transition services agreements with the buyer for providing certain general accounting, information technology and other services up to 19 months following the date of the sale for minimal consideration. The fair value of these transition services agreements was determined to be approximately $36 million, which was adjusted against the sale consideration and recognized as deferred transition services income. For the three months ended March 31, 2023, the transition services income under the transition services agreements was approximately $5 million and was recognized as a reduction to the costs incurred to provide services under the transition services agreements, which was included in Selling and administrative expenses on the Consolidated Statements of (Loss) Income and Comprehensive Income.

Liquidation of a Business in Russia

As part of the liquidation of a business in Russia in preparation for the sale of the portion of the Savory Solutions business, as disclosed in Note 18, the Company recognized a pre-tax loss of approximately $10 million presented in other expense (income), net, and approximately $2 million of tax benefits presented in provision for income taxes on the Consolidated Statements of (Loss) Income and Comprehensive Income for the three months ended March 31, 2023.

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 (Loss) Income and Comprehensive ~~Loss.~~Income.

Frutarom Integration Initiative

In connection with the acquisition of Frutarom, the Company ~~has been executing~~executed an integration plan that, among other initiatives, ~~seeks~~sought to optimize its manufacturing network (the “Frutarom Integration Initiative”). ~~As part of the Frutarom Integration Initiative, the Company expects to close approximately 30 manufacturing sites with all closures targeted to occur by 2023.~~ Since the inception of the initiative through ~~September 30, 2022,~~March 31, 2023, the Company ~~has~~ closed 22 sites and expensed total costs of approximately ~~$38~~$36 million. ~~Total costs for the program are expected to be approximately $42 million including cash and non-cash items.~~

~~2019 Severance Program~~

~~During the year ended December~~As of March 31, ~~2019, the Company incurred severance charges related to approximately 190 headcount reductions, excluding those previously mentioned under~~2023, the Frutarom Integration Initiative. The headcount reductions primarily related to the Scent business unit with additional amounts related to headcount reductions in all business units associated with the establishment of a new shared service center in Europe. Since the program’s inception, the Company has expensed approximately $15 million. As of September 30, 2022, the programInitiative is complete.

N&B Merger Restructuring Liability

For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the Company ~~incurred~~had approximately $9$1 million of reversal to charges ~~primarily~~ related to severance. Since the inception of the restructuring activities, there have been a total of approximately ~~220~~215 headcount reductions and the Company has expensed approximately ~~$39~~$44 million.

2023 Restructuring Program

In December 2022, the Company announced a restructuring program mainly related to headcount reduction to improve its organizational and operating structure, drive efficiencies and achieve cost savings. For the three months ended March 31, 2023, the Company incurred approximately $57 million of charges related to severance and there have been a total of approximately 600 actual and planned headcount reductions. The Company expects to incur a majority of the costs for the 2023 Restructuring Program in the current year.

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Changes in Restructuring Liabilities

Changes in restructuring liabilities during the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 were as follows:


(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	Balance at December 31, 2021		Additional Charges (Reversals), Net		Non-Cash Charges		Cash Payments		Balance at September 30, 2022		(DOLLARS IN MILLIONS)	Balance at December 31, 2022		Additional Charges (Reversals), Net		Cash Payments		Balance at March 31, 2023

Frutarom Integration Initiative	Frutarom Integration Initiative											Frutarom Integration Initiative
Severance	Severance	$	5	$	(1)	$	—	$	—	$	4	Severance	$	4	$	(3)	$	(1)	$	—
Fixed asset write down		—		2		(2)		—		—
Other		3		—		—		(1)		2
2019 Severance Program
Severance		5		(5)		—		—		—

Other Restructuring Charges	Other Restructuring Charges											Other Restructuring Charges
Severance	Severance	1		—		—		—		1		Severance	1		(1)		—		—

N&B Merger Restructuring Liability	N&B Merger Restructuring Liability											N&B Merger Restructuring Liability
Severance	Severance	15		5		—		(12)		8		Severance	9		(1)		(6)		2

Other	Other	—		4		—		(4)		—		Other	1		—		—		1
Total restructuring and other charges		$	29	$	5	$	(2)	$	(17)	$	15
2023 Restructuring Program												2023 Restructuring Program
Severance												Severance	—		57		(1)		56
Total Restructuring and other charges												Total Restructuring and other charges	$	15	$	52	$	(8)	$	59

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 these restructuring programs and activities by segment:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	2022		2021		2022		2021		(DOLLARS IN MILLIONS)	2023		2022
Nourish	Nourish	$	—	$	5	$	3	$	25	Nourish	$	30	$	2
Health & Biosciences	Health & Biosciences	1		1		2		5		Health & Biosciences	10		—
Scent	Scent	(5)		—		—		3		Scent	10		—
Pharma Solutions	Pharma Solutions	—		—		—		1		Pharma Solutions	2		—

Total Restructuring and other charges	Total Restructuring and other charges	$	(4)	$	6	$	5	$	34	Total Restructuring and other charges	$	52	$	2

NOTE 5. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment consisted of the following amounts:


(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	September 30, 2022		December 31, 2021		(DOLLARS IN MILLIONS)	March 31, 2023		December 31, 2022
Asset Type	Asset Type					Asset Type
Land	Land	$	202	$	223	Land	$	191	$	199
Buildings and improvements	Buildings and improvements	1,704		1,764		Buildings and improvements	1,730		1,697
Machinery and equipment	Machinery and equipment	3,303		3,442		Machinery and equipment	3,419		3,344
Information technology	Information technology	297		271		Information technology	329		291
Construction in process	Construction in process	527		461		Construction in process	640		649
Total Property, Plant and Equipment		6,033		6,161
Total Property, plant and equipment						Total Property, plant and equipment	6,309		6,180
Accumulated depreciation	Accumulated depreciation	(1,978)		(1,793)		Accumulated depreciation	(2,085)		(1,977)
Total Property, Plant and Equipment, Net		$	4,055	$	4,368
Total property, plant and equipment, net						Total property, plant and equipment, net	$	4,224	$	4,203

Depreciation expense was ~~$111~~$105 million and ~~$102~~$117 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $345 million and $314 million for the nine months ended September 30, 2022 and 2021,~~ respectively.

As discussed in Note 1, an impairment charge of approximately $28 million was recorded in connection with property, plant and equipment, primarily buildings and improvements, of an asset group that operates primarily in Russia.

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NOTE 6. GOODWILL AND OTHER INTANGIBLE ASSETS, NET

Goodwill

Movements in goodwill attributable to each reportable segment for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 were as follows:

(DOLLARS IN MILLIONS) Nourish Health & Biosciences Scent Pharma Solutions Total
Balance at December 31, 2021 $ 6,555 $ 6,749 $ 1,828 $ 1,282 $ 16,414
Acquisitions — 45 — — 45
Impairment — (2,250) — — (2,250)
Foreign exchange (386) (340) (84) (94) (904)
Balance at September 30, 2022 $ 6,169 $ 4,204 $ 1,744 $ 1,188 $ 13,305

~~Impairment of Goodwill~~

For the third quarter of 2022, the Company determined that goodwill impairment triggering events occurred for its Nourish, Health & Biosciences and Pharma Solutions reporting units, which required it to complete an interim impairment assessment. The primary indicators that were deemed to be triggering events in the quarter for the reporting units were declines in the Company's projections across various reporting units and ongoing adverse macroeconomic impacts such as inflation, increases in interest rates and unfavorable effects from exchange rates.

As a result of the triggering events, the Company assessed the fair value of the reporting units using an income approach. Under the income approach, the Company determines 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 uses the most current actual and forecasted operating data available. Key estimates and assumptions used in these valuations include revenue growth rates, gross margins, EBITDA margins, terminal growth rates and discount rates.

In performing the quantitative impairment test, the Company determined that the fair value of the Nourish and Pharma Solutions reporting units exceeded its carrying value, and determined that there was no impairment of goodwill relating to these reporting units. The Pharma Solutions reporting unit had excess fair value over carrying value of less than 10%. The Company determined that the carrying value of the Health & Biosciences reporting unit exceeded its fair value and recorded a goodwill impairment charge of $2.250 billion in the Consolidated Statements of (Loss) Income and Comprehensive Loss for the three and nine months ended September 30, 2022.

While management believes that the assumptions used in the impairment test were reasonable, changes in key assumptions, including, lower revenue growth, lower gross margin, lower EBITDA margin, lower terminal growth rates or increasing discount rates could result in a future impairment and the Company may be required to write-off the remainder of, or a portion of, the remaining goodwill. Such charge could have a material effect on the Consolidated Statements of Operations and Balance Sheets. These estimates and assumptions are considered Level 3 inputs under the fair value hierarchy.

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(DOLLARS IN MILLIONS)	Nourish		Health & Biosciences		Scent		Pharma Solutions		Total
Balance at December 31, 2022	$	6,050	$	4,321	$	1,745	$	1,239	$	13,355



Transferred to assets held for sale	(4)		—		—		—		(4)

Foreign exchange	50		32		11		14		107


Balance at March 31, 2023	$	6,096	$	4,353	$	1,756	$	1,253	$	13,458

Other Intangible Assets

Other intangible assets, net consisted of the following amounts:

September 30, December 31,
(DOLLARS IN MILLIONS) 2022 2021
Asset Type
Customer relationships $ 8,512 $ 8,935
Technological know-how 2,359 2,494
Trade names & patents 384 411
Other 48 50
Total carrying value 11,303 11,890
Accumulated Amortization
Customer relationships (1,227) (887)
Technological know-how (546) (388)
Trade names & patents (94) (68)
Other (50) (41)
Total accumulated amortization (1,917) (1,384)
Other intangible assets, net $ 9,386 $ 10,506

~~Impairment of Intangible Assets~~

As discussed in Note 1, an impairment charge of approximately $92 million was recorded in connection with intangible assets, primarily customer relationships and technological know-how, of an asset group that operates primarily in Russia.


	March 31,		December 31,
(DOLLARS IN MILLIONS)	2023		2022






Asset Type
Customer relationships	$	8,367	$	8,318
Technological know-how	2,356		2,339
Trade names & patents	360		358

Other	49		47
Total carrying value	11,132		11,062
Accumulated Amortization
Customer relationships	(1,366)		(1,252)
Technological know-how	(648)		(589)
Trade names & patents	(106)		(97)

Other	(44)		(42)
Total accumulated amortization	(2,164)		(1,980)

Other intangible assets, net	$	8,968	$	9,082

Amortization

Amortization expense was ~~$182~~$171 million and ~~$195~~$186 million for the three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021, respectively, and $552 million and $547 million for the nine months ended September 30, 2022 and 2021,~~ respectively.

Amortization expense for the next five years is expected to be as follows:


(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	2022		2023		2024		2025		2026		(DOLLARS IN MILLIONS)	2023		2024		2025		2026		2027
Estimated future intangible amortization expense	Estimated future intangible amortization expense	$	184	$	737	$	736	$	734	$	731	Estimated future intangible amortization expense	$	527	$	702	$	699	$	697	$	598

NOTE 7. OTHER CURRENT ASSETS AND LIABILITIES, AND OTHER ASSETS

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


(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	September 30, 2022		December 31, 2021		(DOLLARS IN MILLIONS)	March 31, 2023		December 31, 2022
Value-added tax receivable	Value-added tax receivable	$	196	$	178	Value-added tax receivable	$	183	$	212
Income tax receivable	Income tax receivable	100		131		Income tax receivable	152		129
Packaging materials and supplies						Packaging materials and supplies	155		148
Prepaid expenses	Prepaid expenses	348		288		Prepaid expenses	163		144

Other	Other	149		131		Other	136		137
Total	Total	$	793	$	728	Total	$	789	$	770

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Other assets consisted of the following amounts:

(DOLLARS IN MILLIONS) September 30, 2022 December 31, 2021
Finance lease right-of-use assets $ 40 $ 21
Deferred income taxes 177 82
Overfunded pension plans 148 136
Cash surrender value of life insurance contracts 47 52
Equity method investments 10 86
Other(1)
241 239
Total $ 663 $ 616

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(DOLLARS IN MILLIONS)	March 31, 2023		December 31, 2022
Deferred income taxes	$	188	$	158
Overfunded pension plans	180		180
Cash surrender value of life insurance contracts	46		45
Finance lease right-of-use assets	21		22
Equity method investments	11		10

Other(1)	298		284
Total	$	744	$	699

_______________________

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

Other current liabilities consisted of the following amounts:


(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	September 30, 2022		December 31, 2021		(DOLLARS IN MILLIONS)	March 31, 2023		December 31, 2022
Rebates and incentives payable	Rebates and incentives payable	$	102	$	113	Rebates and incentives payable	$	92	$	99
Value-added tax payable	Value-added tax payable	45		50		Value-added tax payable	73		65
Interest payable	Interest payable	74		48		Interest payable	81		55
Current pension and other postretirement benefit obligation	Current pension and other postretirement benefit obligation	6		11		Current pension and other postretirement benefit obligation	12		10
Accrued insurance (including workers’ compensation)	Accrued insurance (including workers’ compensation)	9		10		Accrued insurance (including workers’ compensation)	10		9

Restructuring and other charges		15		29
Accrued restructuring						Accrued restructuring	59		15
Current operating lease obligation	Current operating lease obligation	87		109		Current operating lease obligation	84		86
Current financing lease obligation		6		5

Accrued freight						Accrued freight	19		18
Accrued commissions payable						Accrued commissions payable	10		11
Accrued income taxes	Accrued income taxes	412		94		Accrued income taxes	160		313

Other accounts payable and accrued expenses payable		268		270
Accrued expenses payable						Accrued expenses payable	289		256
Other	Other	104		93		Other	76		91
Total	Total	$	1,128	$	832	Total	$	965	$	1,028

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NOTE 8. DEBT

Debt consisted of the following:


(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	Effective Interest Rate		September 30, 2022		December 31, 2021		(DOLLARS IN MILLIONS)	Effective Interest Rate		March 31, 2023		December 31, 2022

2022 Notes		0.69	%	$	—	$	300

2023 Notes(1)	2023 Notes(1)	3.30	%	300		300		2023 Notes(1)	3.30	%	$	300	$	300
2024 Euro Notes(1)	2024 Euro Notes(1)	1.88	%	487		565		2024 Euro Notes(1)	1.88	%	542		532
2025 Notes(1)	2025 Notes(1)	1.22	%	1,000		1,001		2025 Notes(1)	1.22	%	1,000		1,000
2026 Euro Notes(1)	2026 Euro Notes(1)	1.93	%	775		900		2026 Euro Notes(1)	1.93	%	864		845
2027 Notes(1)	2027 Notes(1)	1.56	%	1,216		1,218		2027 Notes(1)	1.56	%	1,214		1,215
2028 Notes(1)	2028 Notes(1)	4.57	%	398		397		2028 Notes(1)	4.57	%	398		398
2030 Notes(1)	2030 Notes(1)	2.21	%	1,510		1,511		2030 Notes(1)	2.21	%	1,509		1,510
2040 Notes(1)	2040 Notes(1)	3.04	%	774		775		2040 Notes(1)	3.04	%	773		774
2047 Notes(1)	2047 Notes(1)	4.44	%	495		494		2047 Notes(1)	4.44	%	495		495
2048 Notes(1)	2048 Notes(1)	5.12	%	787		786		2048 Notes(1)	5.12	%	787		787
2050 Notes(1)	2050 Notes(1)	3.21	%	1,571		1,572		2050 Notes(1)	3.21	%	1,570		1,571

2024 Term Loan Facility(2)	2024 Term Loan Facility(2)	4.06	%	625		625		2024 Term Loan Facility(2)	3.75	%	625		625
2026 Term Loan Facility(2)	2026 Term Loan Facility(2)	4.43	%	625		625		2026 Term Loan Facility(2)	5.08	%	625		625

Revolving Credit Facility(3)								Revolving Credit Facility(3)			—		100
Commercial paper~~(2)~~(4)	Commercial paper~~(2)~~(4)			204		324		Commercial paper~~(2)~~(4)			588		187
Bank overdrafts and other	Bank overdrafts and other			5		7		Bank overdrafts and other			1		6

Total debt	Total debt			10,772		11,400		Total debt			11,291		10,970
Less: Short-term borrowings~~(3)~~(5)	Less: Short-term borrowings~~(3)~~(5)			(512)		(632)		Less: Short-term borrowings~~(3)~~(5)			(2,071)		(597)
Total Long-term debt	Total Long-term debt			$	10,260	$	10,768	Total Long-term debt			$	9,220	$	10,373

_______________________

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

(2)Amount is recorded at fair value.

(3)The interest rate on the Amended Revolving Credit Facility is, at the applicable borrower's option, a per annum rate equal to either (x) an eurocurrency rate plus an applicable margin varying from 1.000% to 1.625% or (y) a base rate plus an applicable margin varying from 0.000% to 0.625%, in each case depending on the public debt ratings for non-credit enhanced long-term senior unsecured debt issued by the Company.

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

~~(3)~~(5)Includes bank borrowings, commercial paper, overdrafts and current portions of long-term debt.

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Commercial Paper

For the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, the Company had gross issuances of ~~$4.725~~$1.320 billion and repayments of ~~$4.845 billion~~$919 million under the Commercial Paper Program. The commercial paper issued had original maturities of less than ~~125~~86 days. For the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company had gross issuances of ~~$200~~$873 million and ~~no repayments.~~repayments of $566 million.

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.

~~Debt Repayments~~Amendments to Existing Credit Agreements

~~2022 Notes~~Amendments to Existing Term Loan Credit Agreement

On ~~September 15, 2022,~~March 23, 2023, the Company ~~repaid~~entered into Amendment No. 3 (“Term Loan Amendment No. 3”) and Amendment No. 4 (“Term Loan Amendment No. 4”, and together with Term Loan Amendment No. 3, the ~~full $300~~“Term Loan Amendments”) to amend that certain term loan credit agreement, dated January 17, 2020 (as amended by that certain Amendment No. 1 to Credit Agreement, dated August 25, 2020, as further amended by that certain Amendment No. 2 to Credit Agreement, dated August 4, 2022, as further supplemented by that certain Icon Debt Assumption Supplement, dated March 4, 2021, the “Existing Term Loan Credit Agreement”, and the Existing Term Loan Credit Agreement, as amended by the Term Loan Amendments, the “Term Loan Credit Agreement”), among the Company (as successor to Nutrition & Biosciences, Inc.), the lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent.

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Term Loan Amendment No. 3, among other things, extends the period during which certain relief is provided with respect to the financial covenant contained in the Existing Term Loan Credit Agreement through December 31, 2024, or such earlier date on which the Company elects to terminate such period (the “Term Loan Covenant Relief Period”), by providing that during the Term Loan Covenant Relief Period, the Company’s consolidated leverage ratio shall not exceed as of the end of the fiscal quarter for the period of the four fiscal quarters then ended: (i) 5.25x for any fiscal quarter ending on or before June 30, 2023, (ii) 5.00x for the fiscal quarter ending September 30, 2023, (iii) 4.75x for any subsequent fiscal quarter ending on or before March 31, 2024, (iv) 4.50x for the fiscal quarter ending June 30, 2024, (v) 4.25x for the fiscal quarter ending September 30, 2024 and (vi) 4.00x for the fiscal quarter ending December 31, 2024. During the Term Loan Covenant Relief Period, Term Loan Amendment No. 3 also prohibits the Company from (i) effecting any share repurchases and (ii) creating liens to secure debt in excess of the greater of $400 million ~~outstanding~~and 5.00% of ~~its 2022 Notes~~Consolidated Net Tangible Assets (as defined in the Term Loan Credit Agreement), in each case subject to certain exceptions set forth therein. The Company was in compliance with all covenants as of March 31, 2023.

Term Loan Amendment No. 4, among other things, replaces LIBOR with Term SOFR (as defined in the Term Loan Credit Agreement) as the reference rate for U.S. dollar-denominated loans. From March 23, 2023, loans under the Term Loan Credit Agreement now bear interest at ~~maturity.~~a base rate or a rate equal to Term SOFR plus an adjustment of 0.10% per annum, plus, in each case, an applicable margin based on the Company's public debt rating. Loans may be prepaid without premium or penalty, subject to customary breakage costs.

~~Amended~~Amendments to Existing Revolving Credit Facility

On March 23, 2023, the Company and certain of its subsidiaries entered into Amendment No. 2 (“Revolver Amendment No. 2”) and Amendment No. 3 (“Revolver Amendment No. 3”, and together with Revolver Amendment No. 2, the “Revolver Amendments”) to amend that certain Third Amended and Restated Credit Agreement, dated July 6,28, 2021 (as amended by that certain Amendment No. 1 to Credit Agreement, dated August 4, 2022, the “Existing Revolving Credit Agreement”, and the Existing Revolving Credit Agreement, as amended by the Revolver Amendments, the “Revolving Credit Agreement”), among the Company and certain of its subsidiaries (collectively, the “Loan Parties”), the lenders party thereto and Citibank, N.A., as administrative agent.

Revolver Amendment No. 2, among other things, extends the period during which certain relief is provided with respect to the financial covenant contained in the Existing Revolving Credit Agreement through December 31, 2024, or such earlier date on which the Company elects to terminate such period (the “Revolver Covenant Relief Period”), by providing that during the Revolver Covenant Relief Period, the Company’s consolidated leverage ratio shall not exceed as of the end of the fiscal quarter for the period of the four fiscal quarters then ended: (i) 5.25x for any fiscal quarter ending on or before June 30, 2023, (ii) 5.00x for the fiscal quarter ending September 30, 2023, (iii) 4.75x for any subsequent fiscal quarter ending on or before March 31, 2024, (iv) 4.50x for the fiscal quarter ending June 30, 2024, (v) 4.25x for the fiscal quarter ending September 30, 2024 and (vi) 4.00x for the fiscal quarter ending December 31, 2024. During the Revolver Covenant Relief Period, Revolver Amendment No. 2 also prohibits the Loan Parties from (i) effecting any share repurchases and (ii) creating liens to secure debt in excess of the greater of $400 million and 5.00% of Consolidated Net Tangible Assets (as defined in the Revolving Credit Agreement), in each case subject to certain exceptions set forth therein. The Company was in compliance with all covenants as of March 31, 2023.

Revolver Amendment No. 3, among other things, replaces LIBOR with Term SOFR (as defined in the Revolving Credit Agreement) as the reference rate for U.S. dollar-denominated loans. From March 23, 2023, loans under the Revolving Credit Agreement now bear interest at a base rate or, in the case of U.S. dollar-denominated loans, a rate equal to Term SOFR plus an adjustment of 0.10% per annum or, in the case of euro-denominated loans, the Euro interbank offered rate, plus, in each case, an applicable margin based on the Company’s public debt rating. Loans may be prepaid without premium or penalty, subject to customary breakage costs.

For the three months ended March 31, 2023, the Company had issuances of $400 million and repayments of $500 million under the Revolving Credit Facility. For the three months ended March 31, 2022, the Company had no borrowings issuances and no repayments.

Subsequent Events

On May 1, 2023, the Company made a ~~$350~~$300 million debt repayment related to the ~~Amended~~2023 Notes at maturity, which was funded from the issuance of $400 million under the Revolving Credit Facility. As of September 30, 2022, the Company had no outstanding borrowings under its $2.000 billion Amended Revolving Credit Facility. There were also no borrowings under the Amended Revolving Credit Facility in 2021.

~~Amendment to Existing Debt Agreements~~

On August 4, 2022, IFF amended its existing Term Loan Credit Agreement and Amended Revolving Credit Facility, and the amendment delays certain step downs from the maximum permitted leverage ratio of 4.50 to 1.0, stepping down to 3.50 to 1.0 over time, with the first step-down now occurring at the end of the second quarter of 2023 and the final step-down occurring at the end of the third quarter of 2024.

NOTE 9. 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 7 years.

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The components of lease expense were as follows:


		Three Months Ended		Three Months Ended		Nine Months Ended		Nine Months Ended			Three Months Ended		Three Months Ended
(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	September 30, 2022		September 30, 2021		September 30, 2022		September 30, 2021		(DOLLARS IN MILLIONS)	March 31, 2023		March 31, 2022
Operating lease cost	Operating lease cost	$	43	$	43	$	135	$	121	Operating lease cost	$	49	$	47
Finance lease cost	Finance lease cost	2		2		6		4		Finance lease cost	2		2

Supplemental cash flow information related to leases was as follows:

Nine Months Ended Nine Months Ended
(DOLLARS IN MILLIONS) September 30, 2022 September 30, 2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases $ 102 $ 94
Financing cash flows for finance leases 5 3
Right-of-use assets obtained in exchange for lease obligations
Operating leases 40 69
Finance leases 4 16

As a result of the Company’s acquisition of Health Wright, there was an increase of approximately $22 million in financing lease right-of-use assets and $21 million in financing lease liabilities as of the Acquisition Date.


	Three Months Ended		Three Months Ended
(DOLLARS IN MILLIONS)	March 31, 2023		March 31, 2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows for operating leases	$	33	$	35

Financing cash flows for finance leases	2		2
Right-of-use assets obtained in exchange for lease obligations
Operating leases	23		18
Finance leases	2		1

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

~~Table of Contents~~

NOTE 10. INCOME TAXES

The effective tax rate for the three months ended ~~September 30, 2022~~March 31, 2023 was ~~(7.9)%~~157.1%, which was primarily driven by tax expenses relating to planned business divestitures and changes in the ~~recording~~mix of ~~the tax effects~~income and losses, some of ~~the divestiture of the Microbial Control business unit and book~~which do not give rise to tax ~~differences related~~benefits due to ~~the impairment of goodwill in the Health & Biosciences operating segment.~~

The effective tax rate for the nine months ended September 30, 2022 was (13.6)%, which was primarily driven by the recording of the tax effects of the divestiture of the Microbial Control business unit and book to tax differences related to the impairment of goodwill in the Health & Biosciences operating segment, offset in part by certain one-time benefits.valuation allowances.

As of ~~September 30, 2022,~~March 31, 2023, the Company had approximately ~~$129~~$109 million of unrecognized tax benefits recorded in Other liabilities and ~~no amounts~~approximately $5 million recorded to Other current liabilities. If these unrecognized tax benefits were recognized, the effective tax rate would be affected.

As of ~~September 30, 2022,~~March 31, 2023, the Company had accrued interest and penalties of approximately ~~$34~~$35 million classified in Other liabilities and ~~no amounts~~approximately $2 million classified in Other current liabilities.

As of ~~September 30, 2022,~~March 31, 2023, the Company’s aggregate provisions for uncertain tax positions, including interest and penalties, was approximately ~~$163~~$151 million associated with tax positions asserted in various jurisdictions.

The Company has ongoing income tax audits and legal proceedings which are at various stages of administrative or judicial review. In addition, the Company has open tax years with various taxing jurisdictions that range primarily from 2012 to 2021. Based on currently available information, the Company does not believe the outcome of any of these tax audits and other tax positions related to open tax years, when finalized, will have a material impact on its results of operations.

~~The Company also has other ongoing tax audits and legal proceedings that relate to indirect taxes, such as value-added taxes, sales and use taxes and property taxes, which are discussed in Note 16.~~

The Company regularly repatriates earnings from non-U.S. subsidiaries. As the Company repatriates these funds to the U.S., they will be required to pay income taxes in certain U.S. states and applicable foreign withholding taxes during the period when such repatriation occurs. Accordingly, as of ~~September 30, 2022,~~March 31, 2023, the Company had a deferred tax liability of approximately ~~$93~~$174 million for the effect of repatriating the funds to the U.S., attributable to various non-U.S. subsidiaries. There is no deferred tax liability associated with non-U.S. subsidiaries where we intend to indefinitely reinvest the earnings to fund local operations and/or capital projects.

NOTE 11. 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, ~~RSUs, SSARs~~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.

Table of Contents

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	2022		2021		2022		2021		(DOLLARS IN MILLIONS)	2023		2022
Equity-based awards		$	12	$	17	$	37	$	44
Liability-based awards		(1)		—		—		6

Total stock-based compensation expense	Total stock-based compensation expense	11		17		37		50		Total stock-based compensation expense	$	12	$	9
Less: Tax benefit	Less: Tax benefit	(2)		(3)		(7)		(10)		Less: Tax benefit	(2)		(2)
Total stock-based compensation expense, after tax	Total stock-based compensation expense, after tax	$	9	$	14	$	30	$	40	Total stock-based compensation expense, after tax	$	10	$	7

As of ~~September 30, 2022,~~March 31, 2023, there was approximately ~~$84~~$58 million of total unrecognized compensation cost related to non-vested awards granted under the equity incentive plans.

NOTE 12. SEGMENT INFORMATION

The Company is organized into four reportable operating segments: Nourish, Health & Biosciences, ~~(“H&B”),~~ Scent and Pharma Solutions. These segments align with the internal structure to manage these businesses. The Company’s Chief Operating Decision Maker regularly reviews financial information to allocate resources and assess performance utilizing these segments.

~~Table of Contents~~

Nourish is comprised of three business units, Ingredients, Flavors and Food Designs, with a diversified portfolio across natural and plant-based specialty food ingredients, flavor compounds, and savory solutions and inclusions, respectively. Ingredients provide texturizing solutions to the food industry, food protection solutions used in food and beverage products, specialty soy and pea protein with value-added formulations, emulsifiers and sweeteners. Flavors provide a range of flavor compounds and natural taste solutions that are ultimately used by IFF’s customers in savory products, beverages, sweets and dairy products. Flavors also provide value-added spices and seasoning ingredients for meat, food service, convenience, alternative protein and culinary products. Food Designs provide savory solution products such as spices, sauces, marinades and mixtures. Additionally, Food Designs provide inclusion products that help with taste and texture by, among other things, combining flavorings with fruit, vegetables, and other natural ingredients for a wide range of food products, such as health snacks, baked goods, cereals, pastries, ice cream and other dairy products.

Health & Biosciences is comprised of five business units, Health, Cultures & Food Enzymes, Home & Personal Care, Animal Nutrition and Grain Processing, with a biotechnology-driven portfolio of products that serve the health and wellness, food, consumer and industrial markets. Products within this portfolio range from enzymes, food cultures, probiotics and specialty ingredients for non-food applications. Health provides ingredients for dietary supplements, food and beverage, specialized nutrition and pharma. Cultures & Food Enzymes provide products that aim to serve the global demand for healthy, natural, clean label and fermented food for fresh dairy, cheese, bakery and brewing products. This is accomplished by providing IFF’s customers with products that allow for extended shelf life and stability, which help to improve customers’ products and performance. The business unit’s enzyme solution also allows IFF’s customers to provide low sugar, high fiber and lactose-free dairy products. Home & Personal Care produces enzymes for detergents, cleaning and textile processing products in the laundry, dishwashing, textiles and industrials and personal care markets that help to enhance product and process performances. Animal Nutrition produces enzymes that help to improve the product and process performance of animal feed products, which aim to lessen environmental impact by reducing farm waste. Grain Processing produces enzymes for biofuel production and carbohydrate processing.

Scent is comprised of (1) Fragrance Compounds, which are ultimately used by ~~our~~IFF’s customers in two broad categories: Fine Fragrances, including perfumes and colognes, and Consumer Fragrances, including fragrance compounds for personal care (e.g., soaps), household products (e.g., detergents and cleaning agents) and beauty care, including toiletries; (2) Fragrance Ingredients, consisting of synthetic and natural ingredients that can be combined with other materials to create unique fine fragrance and consumer fragrance compounds; and (3) Cosmetic Active Ingredients, consisting of active and functional ingredients, botanicals and delivery systems to support our customers’ cosmetic and personal care product lines. Major fragrance customers include the cosmetics industry, including perfume and toiletries manufacturers, and the household products industry, including manufacturers of soaps, detergents, fabric care, household cleaners and air fresheners.

Pharma Solutions is comprised of a vast portfolio, including cellulosics and seaweed-based pharmaceutical excipients, used to improve the functionality and delivery of active pharmaceutical ingredients, including controlled or modified drug release formulations, and enabling the development of more effective pharmaceutical finished dosage formats. Pharma Solutions excipients are used in prescription and over-the-counter pharmaceuticals and dietary supplements. Pharma Solutions products also serve a variety of other specialty and industrial end-uses including coatings, inks, electronics, agriculture and consumer products.

1816

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Reportable segment information was as follows:


		Three Months Ended				Nine Months Ended					Three Months Ended
		September 30,				September 30,					March 31,
(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	2022		2021		2022		2021		(DOLLARS IN MILLIONS)	2023		2022
Net sales:	Net sales:									Net sales:
Nourish	Nourish	$	1,703	$	1,662	$	5,252	$	4,638	Nourish	$	1,653	$	1,731
Health & Biosciences	Health & Biosciences	512		618		1,838		1,683		Health & Biosciences	513		661
Scent	Scent	591		580		1,756		1,699		Scent	608		585
Pharma Solutions	Pharma Solutions	257		211		750		605		Pharma Solutions	253		249
Consolidated	Consolidated	$	3,063	$	3,071	$	9,596	$	8,625	Consolidated	$	3,027	$	3,226
Segment Adjusted Operating EBITDA:	Segment Adjusted Operating EBITDA:									Segment Adjusted Operating EBITDA:
Nourish	Nourish	$	287	$	327	$	981	$	921	Nourish	$	208	$	329
Health & Biosciences	Health & Biosciences	137		151		513		469		Health & Biosciences	131		192
Scent	Scent	119		130		328		375		Scent	105		116
Pharma Solutions	Pharma Solutions	69		40		192		131		Pharma Solutions	59		65
Total	Total	612		648		2,014		1,896		Total	503		702
Depreciation & Amortization	Depreciation & Amortization	(293)		(297)		(897)		(861)		Depreciation & Amortization	(276)		(303)
Interest Expense	Interest Expense	(83)		(74)		(232)		(216)		Interest Expense	(111)		(72)
Other Income, net		33		26		43		44
Acquisition Related Costs (a)		(1)		—		(2)		—
Restructuring and Other Charges		4		(6)		(5)		(34)
Gains on sales of fixed assets		—		1		2		1
Impairment of Goodwill (b)		(2,250)		—		(2,250)		—
Impairment of Long-Lived Assets (c)		—		—		(120)		—
Shareholder Activism Related Costs (d)		—		—		(3)		(7)
Business Divestiture Costs (e)		(31)		(16)		(91)		(21)
Employee Separation Costs (f)		—		(22)		(4)		(28)
Global Shared Services Implementation Costs (g)		(1)		—		(1)		—
Frutarom Acquisition Related Costs (h)		—		—		(1)		—
N&B Inventory Step-Up Costs		—		14		—		(363)
N&B Transaction Related Costs (i)		—		—		—		(91)
Integration Related Costs (j)		(25)		(24)		(73)		(80)

(Loss) Income Before Taxes		$	(2,035)	$	250	$	(1,620)	$	240
Other (Expense) Income, net										Other (Expense) Income, net	(6)		16
Restructuring and Other Charges (a)										Restructuring and Other Charges (a)	(52)		(2)
Acquisition, Divestiture and Integration Related Costs (b)										Acquisition, Divestiture and Integration Related Costs (b)	(31)		(49)
Strategic Initiatives Costs (c)										Strategic Initiatives Costs (c)	(13)		—
Regulatory Costs (d)										Regulatory Costs (d)	(5)		—
Other (e)										Other (e)	5		(7)

Income Before Taxes										Income Before Taxes	$	14	$	285

_______________________


(a)			~~Represents~~For 2023 and 2022, represents costs primarily related to severance as part of the ~~acquisition of Health Wright Products, primarily consulting and legal fees.~~Company's restructuring efforts.
(b)			~~Represents~~For 2023 and 2022, primarily represents costs related to the ~~impairment~~Company's actual and planned acquisitions, sales and planned sales of ~~goodwill in~~businesses and integration related activities primarily for Frutarom and N&B. These costs primarily consisted of external consulting fees, professional and legal fees and salaries of individuals who are fully dedicated to such efforts. For 2023, integration costs primarily relate to IT costs for the ~~Health & Biosciences reporting unit.~~N&B integration. For the three months ended March 31, 2023, business divestiture and integration related costs were approximately $21 million and $10 million, respectively. For the three months ended March 31, 2022, business divestiture, integration related and acquisition related costs were $30 million, $18 million and $1 million, respectively.
(c)			Represents costs related to the ~~impairment of intangible~~Company's strategic assessment and ~~fixed assets of an asset group that operates primarily in Russia.~~
~~(d)~~			~~Represents shareholder activist related costs, primarily professional fees.~~
~~(e)~~			~~Represents costs related to the Company's planned sales of businesses, primarily legal~~business portfolio optimization efforts and ~~professional fees.~~
~~(f)~~			~~Represents costs related to severance, including accelerated stock compensation expense, for certain employees and executives who have been separated or will separate from the Company.~~
~~(g)~~			~~Represents costs related to the Company's efforts of restructuring~~reorganizing the Global Shared Services Centers, primarily consulting fees.
~~(h)~~			~~Represents transaction-related costs and expenses related to the acquisition of Frutarom.~~
~~(i)~~			~~Represents transaction costs and expenses related to the transaction with N&B, primarily legal and professional fees.~~
~~(j)~~(d)			Represents costs primarily related to ~~integration activities since 2018, primarily~~legal fees incurred for ~~Frutarom and N&B.~~the ongoing investigations of the fragrance businesses.
(e)			For 2023, represents gains from sale of fixed assets. For 2022, represents shareholder activist related costs, primarily ~~related to external consulting~~professional fees, and ~~internal integration~~severance costs, including ~~salaries of individuals~~accelerated stock compensation expense, for certain executives who ~~are fully dedicated to integration efforts. For 2021, represents costs primarily related to performance stock awards and consulting fees for advisory services.~~have been separated from the Company.

1917

Table of Contents

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


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	2022		2021		2022		2021		(DOLLARS IN MILLIONS)	2023		2022
Europe, Africa and Middle East	Europe, Africa and Middle East	$	1,030	$	1,084	$	3,258	$	3,041	Europe, Africa and Middle East	$	1,070	$	1,128
Greater Asia	Greater Asia	701		696		2,200		1,990		Greater Asia	688		744
North America	North America	939		925		3,006		2,608		North America	905		1,002
Latin America	Latin America	393		366		1,132		986		Latin America	364		352
Consolidated	Consolidated	$	3,063	$	3,071	$	9,596	$	8,625	Consolidated	$	3,027	$	3,226


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	2022		2021		2022		2021		(DOLLARS IN MILLIONS)	2023		2022
Net sales related to the U.S.	Net sales related to the U.S.	$	920	$	860	$	2,799	$	2,390	Net sales related to the U.S.	$	871	$	901
Net sales attributed to all foreign countries	Net sales attributed to all foreign countries	2,143		2,211		6,797		6,235		Net sales attributed to all foreign countries	2,156		2,325

No non-U.S. country had net sales greater than 6% of total consolidated net sales for the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023 and ~~2021.~~2022.

NOTE 13. EMPLOYEE BENEFITS

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


(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	U.S. Plans								(DOLLARS IN MILLIONS)	U.S. Plans
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Service cost for benefits earned(1)		$	1	$	—	$	1	$	1

Interest cost on projected benefit obligation(2)	Interest cost on projected benefit obligation(2)	4		62		12		68		Interest cost on projected benefit obligation(2)	$	7	$	4
Expected return on plan assets(2)	Expected return on plan assets(2)	(5)		(92)		(16)		(102)		Expected return on plan assets(2)	(8)		(5)
Net amortization and deferrals(2)	Net amortization and deferrals(2)	1		23		5		27		Net amortization and deferrals(2)	—		2
Net periodic benefit (income) cost	Net periodic benefit (income) cost	$	1	$	(7)	$	2	$	(6)	Net periodic benefit (income) cost	$	(1)	$	1


(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	Non-U.S. Plans								(DOLLARS IN MILLIONS)	Non-U.S. Plans
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Service cost for benefits earned(1)	Service cost for benefits earned(1)	$	9	$	10	$	28	$	32	Service cost for benefits earned(1)	$	5	$	9
Interest cost on projected benefit obligation(2)	Interest cost on projected benefit obligation(2)	4		3		13		8		Interest cost on projected benefit obligation(2)	9		5
Expected return on plan assets(2)	Expected return on plan assets(2)	(10)		(19)		(32)		(44)		Expected return on plan assets(2)	(12)		(11)
Net amortization and deferrals(2)	Net amortization and deferrals(2)	3		5		9		15		Net amortization and deferrals(2)	—		3

Net periodic benefit (income) cost	Net periodic benefit (income) cost	$	6	$	(1)	$	18	$	11	Net periodic benefit (income) cost	$	2	$	6

_______________________

(1)Included as a component of Operating ~~(loss)~~ profit.

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

The amounts of interest cost, expected return and net amortization and deferrals for the three and nine months ended September 30, 2021 were updated to reflect the correction of certain prior period amounts, which aggregated to approximately $17 million.

The Company expects to contribute a total of $5 million to its U.S. pension plans and a total of ~~$33~~$32 million to its non-U.S. pension plans during ~~2022.~~2023. During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, no contributions were made to the qualified U.S. pension plans, ~~$22~~$6 million of contributions were made to the non-U.S. pension plans, and $3$1 million of benefit payments were made with respect to the Company’s non-qualified U.S. pension plan.

~~Table of Contents~~

(Income) expense recognized for postretirement benefits other than pensions included the following components:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	2022		2021		2022		2021		(DOLLARS IN MILLIONS)	2023		2022
Service cost for benefits earned		$	1	$	—	$	1	$	—

Interest cost on projected benefit obligation	Interest cost on projected benefit obligation	—		6		1		7		Interest cost on projected benefit obligation	$	1	$	—
Net amortization and deferrals	Net amortization and deferrals	(2)		(16)		(4)		(18)		Net amortization and deferrals	(1)		(1)
Total postretirement benefit (income) expense	Total postretirement benefit (income) expense	$	(1)	$	(10)	$	(2)	$	(11)	Total postretirement benefit (income) expense	$	—	$	(1)

The Company expects to contribute $4$3 million to its postretirement benefits other than pension plans during ~~2022.~~2023. In the ~~nine~~three months ended ~~September 30, 2022, $2~~March 31, 2023, $1 million of contributions were made.

Table of Contents

NOTE 14. 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 determines the fair value of structured liabilities (where performance is linked to structured interest rates, inflation or currency risks) using the London Interbank Offer Rate (“LIBOR”) swap curve and forward interest and exchange rates at period end. Such instruments are classified as Level 2 based on the observability of significant inputs to the model. The Company does not have any instruments classified as Level 3, other than those included in pension asset trusts as discussed in Note 15 of the Company’s ~~2021~~2022 Form 10-K.

These valuations take into consideration the Company’s credit risk and its counterparties’ credit risk. The estimated change in the fair value of these instruments due to such changes in its own credit risk (or instrument-specific credit risk) was not material as of ~~September 30, 2022.~~March 31, 2023.

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Table of Contents

The carrying values and the estimated fair values of financial instruments at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 consisted of the following:

September 30, 2022 December 31, 2021
(DOLLARS IN MILLIONS) Carrying Value Fair Value Carrying Value Fair Value
LEVEL 1
Cash and cash equivalents(1)
$ 538 $ 538 $ 711 $ 711
2025 Notes(2)
1,000 878 1,001 968
2027 Notes(2)
1,216 982 1,218 1,180
2030 Notes(2)
1,510 1,150 1,511 1,466
2040 Notes(2)
774 524 775 762
2050 Notes(2)
1,571 985 1,572 1,556
LEVEL 2
Credit facilities and bank overdrafts(3)
5 5 7 7
Derivatives
Derivative assets(4)
12 12 — —
Derivative liabilities(4)
2 2 7 7
Commercial paper(3)
204 204 324 324
Long-term debt:(5)
2022 Notes — — 300 300
2023 Notes 300 297 300 308
2024 Euro Notes 487 473 565 585
2026 Euro Notes 775 717 900 960
2028 Notes 398 368 397 452
2047 Notes 495 387 494 585
2048 Notes 787 672 786 1,026
2024 Term Loan Facility(6)
625 625 625 625
2026 Term Loan Facility(6)
625 625 625 625


	March 31, 2023				December 31, 2022
(DOLLARS IN MILLIONS)	Carrying Value		Fair Value		Carrying Value		Fair Value
LEVEL 1
Cash and cash equivalents(1)	$	590	$	590	$	483	$	483
LEVEL 2
Credit facilities and bank overdrafts(2)	1		1		106		106
Derivatives
Derivative assets(3)	22		22		20		20
Derivative liabilities(3)	65		65		56		56
Commercial paper(2)	588		588		187		187
Long-term debt:

2023 Notes(4)	300		299		300		298
2024 Euro Notes(4)	542		531		532		519
2025 Notes(4)	1,000		895		1,000		884
2026 Euro Notes(4)	864		789		845		774
2027 Notes(4)	1,214		1,020		1,215		1,006
2028 Notes(4)	398		383		398		380
2030 Notes(4)	1,509		1,205		1,510		1,188
2040 Notes(4)	773		535		774		535
2047 Notes(4)	495		393		495		390
2048 Notes(4)	787		689		787		685
2050 Notes(4)	1,570		1,022		1,571		1,021
2024 Term Loan Facility(5)	625		625		625		625
2026 Term Loan Facility(5)	625		625		625		625

_______________________

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

(2)~~The fair value of the Notes is based on market quoted price as there is an active market for the Notes and observable market data and inputs.~~

~~(3)~~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.

~~(4)~~(3)The carrying amount approximates fair value as the instruments are marked-to-market and held at fair value on the Consolidated Balance Sheets.

~~(5)~~(4)The fair value of the ~~Company’s long-term debt was calculated~~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 ~~discounted cash flows applying current interest rates and current~~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, ~~based on its own credit risk.~~reported trades and broker-dealer quotes, all with reasonable levels of transparency.

~~(6)~~(5)The carrying amount approximates fair value as the Term Loans were assumed at fair value and the interest rate is reset frequently based on current market rates.

Derivatives

Foreign Currency Forward Contracts

The Company periodically enters into foreign currency forward contracts with the objective of reducing exposure to cash flow volatility associated with its intercompany loans and foreign currency receivables and payables. These contracts generally involve the exchange of one currency for a second currency at a future date, have maturities not exceeding twelve months and are with counterparties which are major international financial institutions.

Commodity Contracts

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

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~~Cash Flow Hedges~~

Through the third quarter of 2021, the Company maintained several forward currency contracts which qualified as cash flow hedges. The objective of these hedges is to protect against the currency risk associated with forecasted U.S. dollar (“USD”) denominated raw material purchases made by Euro (“EUR”) functional currency entities which result from changes in the EUR/USD exchange rate. The effective portions of cash flow hedges are recorded in other comprehensive income (“OCI”) as a component of Gains on derivatives qualifying as hedges in the accompanying Consolidated Statements of (Loss) Income and Comprehensive Loss. Realized gains/(losses) in accumulated other comprehensive income (“AOCI”) related to cash flow hedges of raw material purchases are recognized as a component of Cost of goods sold in the accompanying Consolidated Statements of (Loss) Income and Comprehensive Loss in the same period as the related costs are recognized.

~~There were no cash flow hedges as of September 30, 2022 and December 31, 2021.~~

Hedges Related to Issuances of Debt

As of ~~September 30, 2022,~~March 31, 2023, the Company designated approximately ~~$1.262~~$1.406 billion 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 OCI as a component of foreign currency translation adjustments in the accompanying Consolidated Statements of (Loss) Income and Comprehensive ~~Loss.~~Income.

Cross Currency Swaps

During the third quarter of 2022, the Company entered into a transaction to unwind the fourteen outstanding EUR/USD cross currency swaps designated as net investment hedges issued between the third quarter of 2019 and the first quarter of 2022. The Company ~~received proceeds of approximately $183 million, including $11 million of interest income.~~

~~Following the unwinding of the existing swaps, during the third quarter of 2022, the Company entered into~~has twelve ~~new~~ EUR/USD cross currency swaps with a notional value of ~~$1.4~~$1.400 billion that mature through November 2030. The swaps all qualified as net investment hedges in order to mitigate a portion of the Company’s net European investments from foreign currency risk. As of ~~September 30, 2022,~~March 31, 2023, the twelve swaps were in a net ~~asset~~liability position with an aggregate fair value of ~~$10~~$41 million, which were classified as Other assets and 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 ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	September 30, 2022		December 31, 2021		(DOLLARS IN MILLIONS)	March 31, 2023		December 31, 2022
Foreign currency contracts(1)	Foreign currency contracts(1)	$	89	$	46	Foreign currency contracts(1)	$	86	$	92
Commodity contracts(1)	Commodity contracts(1)	2		10		Commodity contracts(1)	8		(1)
Cross currency swaps	Cross currency swaps	1,400		300		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 ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021:~~2022:


		September 30, 2022							March 31, 2023
(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value		(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)	Derivative assets(1)							Derivative assets(1)

Cross currency swaps								Cross currency swaps	$	22	$	—	$	22

Derivative liabilities(2)								Derivative liabilities(2)
Foreign currency contracts	Foreign currency contracts	$	—	$	2	$	2	Foreign currency contracts	$	—	$	2	$	2
Cross currency swaps	Cross currency swaps	10		—		10		Cross currency swaps	63		—		63

Total derivative assets		$	10	$	2	$	12
Derivative liabilities(2)
Foreign currency contract		$	—	$	2	$	2

Total derivative liabilities								Total derivative liabilities	$	63	$	2	$	65

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		December 31, 2021							December 31, 2022
(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value		(DOLLARS IN MILLIONS)	Fair Value of Derivatives Designated as Hedging Instruments		Fair Value of Derivatives Not Designated as Hedging Instruments		Total Fair Value

Derivative liabilities(2)
Derivative assets(1)								Derivative assets(1)
Foreign currency contracts	Foreign currency contracts	$	—	$	2	$	2	Foreign currency contracts	$	—	$	1	$	1
Cross currency swaps	Cross currency swaps	5		—		5		Cross currency swaps	19		—		19
Total derivative liabilities		$	5	$	2	$	7

Total derivative assets								Total derivative assets	$	19	$	1	$	20
Derivative liabilities(2)								Derivative liabilities(2)

Cross currency swaps								Cross currency swaps	$	56	$	—	$	56

_______________________

(1)Derivative assets are recorded to Other assets on the Consolidated Balance Sheets.

(2)Derivative liabilities are recorded to Other ~~current~~ 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 in the Consolidated Statements of (Loss) Income and Comprehensive ~~Loss~~Income for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

Amount of Gain (Loss) Location of Gain (Loss) Recognized in Income on Derivative
(DOLLARS IN MILLIONS) Three Months Ended September 30,
2022 2021
Foreign currency contracts(1)
$ 2 $ — Other income, net
Amount of Gain (Loss) Location of Gain (Loss) Recognized in Income on Derivative
(DOLLARS IN MILLIONS) Nine Months Ended September 30,
2022 2021
Foreign currency contracts(1)
$ 4 $ 5 Other income, net

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	Amount of Gain (Loss)				Location of Gain (Loss) Recognized in Income on Derivative
(DOLLARS IN MILLIONS)	Three Months Ended March 31,
	2023		2022
Foreign currency contracts(1)	$	—	$	2	Other expense (income), net

_______________________

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

The following table shows the effect of the Company’s derivative and non-derivative instruments designated as ~~cash flow and~~ net investment hedging instruments, net of tax, in the Consolidated Statements of (Loss) Income and Comprehensive ~~Loss~~Income for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

Amount of Gain (Loss)
Recognized in OCI on
Derivative (Effective
Portion) Location of Gain (Loss)
Reclassified from AOCI into Income (Effective Portion) Amount of Gain (Loss)
Reclassified from
Accumulated OCI into
Income (Effective
Portion)
Three Months Ended September 30, Three Months Ended September 30,
(DOLLARS IN MILLIONS) 2022 2021 2022 2021
Derivatives in Cash Flow Hedging Relationships:
Foreign currency contracts $ — $ 1 Cost of goods sold $ — $ (1)
Derivatives in Net Investment Hedging Relationships:
Cross currency swaps (36) 5 N/A — —
Non-Derivatives in Net Investment Hedging Relationships:
2024 Euro Notes 30 9 N/A — —
2021 Euro Notes & 2026 Euro Notes 48 20 N/A — —
Total $ 42 $ 35 $ — $ (1)

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		Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)				Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)		Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)							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)
		Nine Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended March 31,											Three Months Ended March 31,
(DOLLARS IN MILLIONS)											(DOLLARS IN MILLIONS)		2023				2022							2023			2022
		2022		2021			Location of Gain (Loss) Reclassified from AOCI into Income (Effective Portion)			2022				2021
Derivatives in Cash Flow Hedging Relationships:
Foreign currency contracts		$	—	$	7			$	—		$	(5)

Derivatives in Net Investment Hedging Relationships:	Derivatives in Net Investment Hedging Relationships:													Derivatives in Net Investment Hedging Relationships:

Cross currency swaps	Cross currency swaps	12		11			N/A			—				—		Cross currency swaps	$	(3)			$	(1)		N/A			$	—			$	—
Non-Derivatives in Net Investment Hedging Relationships:	Non-Derivatives in Net Investment Hedging Relationships:													Non-Derivatives in Net Investment Hedging Relationships:
2024 Euro Notes	2024 Euro Notes	60		23		N/A		—			—			2024 Euro Notes	(9)				9				N/A		—				—
2021 Euro Notes & 2026 Euro Notes	2021 Euro Notes & 2026 Euro Notes	96		52		N/A		—			—			2021 Euro Notes & 2026 Euro Notes	(14)				14				N/A		—				—
Total	Total	$	168	$	93			$	—		$	(5)		Total	$	(26)			$	22					$	—			$	—

The ineffective portion of the above noted ~~cash flow~~net investment hedges was not material during the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

At ~~September 30, 2022,~~March 31, 2023, based on current market rates, the Company does not expect any derivative losses (net of tax), included in AOCI, to be reclassified into earnings within the next 12 months.

NOTE 15. ACCUMULATED OTHER COMPREHENSIVE LOSS

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

(DOLLARS IN MILLIONS) Foreign
Currency
Translation
Adjustments Gains (Losses)
on Derivatives
Qualifying as
Hedges Pension and
Postretirement
Liability
Adjustment Total
Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2021 $ (1,133) $ 1 $ (291) $ (1,423)
OCI before reclassifications (1,770) — (2) (1,772)
Amounts reclassified from AOCI — — 8 8
Net current period other comprehensive income (loss) (1,770) — 6 (1,764)
Accumulated other comprehensive (loss) income, net of tax, as of September 30, 2022 $ (2,903) $ 1 $ (285) $ (3,187)


(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	Foreign Currency Translation Adjustments		Gains (Losses) on Derivatives Qualifying as Hedges		Pension and Postretirement Liability Adjustment		Total		(DOLLARS IN MILLIONS)	Foreign Currency Translation Adjustments		Gains (Losses) on Derivatives Qualifying as Hedges		Pension and Postretirement Liability Adjustment		Total
Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2020		$	(285)	$	(7)	$	(406)	$	(698)
Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2022										Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2022	$	(2,037)	$	1	$	(133)	$	(2,169)
OCI before reclassifications	OCI before reclassifications	(493)		2		—		(491)		OCI before reclassifications	284		—		(1)		283
Amounts reclassified from AOCI	Amounts reclassified from AOCI	—		5		4		9		Amounts reclassified from AOCI	—		—		(1)		(1)
Net current period other comprehensive income (loss)	Net current period other comprehensive income (loss)	(493)		7		4		(482)		Net current period other comprehensive income (loss)	284		—		(2)		282
Accumulated other comprehensive (loss) income, net of tax, as of September 30, 2021		$	(778)	$	—	$	(402)	$	(1,180)
Accumulated other comprehensive (loss) income, net of tax, as of March 31, 2023										Accumulated other comprehensive (loss) income, net of tax, as of March 31, 2023	$	(1,753)	$	1	$	(135)	$	(1,887)

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(DOLLARS IN MILLIONS)	Foreign Currency Translation Adjustments		Gains (Losses) on Derivatives Qualifying as Hedges		Pension and Postretirement Liability Adjustment		Total
Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2021	$	(1,133)	$	1	$	(291)	$	(1,423)
OCI before reclassifications	(199)		—		(3)		(202)
Amounts reclassified from AOCI	—		—		3		3
Net current period other comprehensive income (loss)	(199)		—		—		(199)
Accumulated other comprehensive (loss) income, net of tax, as of March 31, 2022	$	(1,332)	$	1	$	(291)	$	(1,622)

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


		Nine Months Ended September 30,				Affected Line Item in the Consolidated Statements of (Loss) Income and Comprehensive Loss		Three Months Ended March 31,				Affected Line Item in the Consolidated Statements of (Loss) Income and Comprehensive Income
(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	2022		2021			(DOLLARS IN MILLIONS)	2023		2022
Gains (losses) on derivatives qualifying as hedges

Foreign currency contracts		$	—	$	(6)	Cost of goods sold

Gains (losses) on pension and postretirement liability adjustments							Gains (losses) on pension and postretirement liability adjustments

Prior service cost							Prior service cost	$	1	$	2	(1)
Actuarial losses							Actuarial losses	—		(5)		(1)

Tax	Tax	—		1		Provision for income taxes	Tax	—		—		Provision for income taxes
Total	Total	$	—	$	(5)	Total, net of income taxes	Total	$	1	$	(3)	Total, net of income taxes
Losses on pension and postretirement liability adjustments

Prior service cost		$	5	$	5	(1)
Actuarial losses		(15)		(27)		(1)
Other items		—		17		(2)
Tax		2		1		Provision for income taxes
Total		$	(8)	$	(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 15 of the Company’s ~~2021~~2022 Form 10-K for additional information regarding net periodic benefit cost.

~~(2)Represents certain amounts of pension income that were corrected in the 2021 period. Refer to Note 13 for additional information.~~

NOTE 16. 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.

~~At September 30, 2022,~~As of March 31, 2023, the Company had a total capacity of approximately $427 million of bank guarantees, commercial guarantees, standby letters of credit and surety bonds ~~of approximately $411 million~~ with various financial institutions. Included in the above aggregate amount was a total of ~~$10~~$9 million for other assessments in Brazil for various income tax and indirect tax disputes related to fiscal years 1998-2011. There was a total of approximately ~~$20~~$104 million outstanding under the bank guarantees, ~~and~~ standby letters of credit and ~~approximately $90 million outstanding under the~~ commercial guarantees as of ~~September 30, 2022.~~March 31, 2023.

In order to challenge the assessments in these cases in Brazil, the Company has been required to, and has separately pledged assets, principally property, plant and equipment, to cover assessments in the amount of approximately $7$8 million as of ~~September 30, 2022.~~March 31, 2023.

Lines of Credit

The Company has various lines of credit which are available to support its ongoing business operations. As of ~~September 30, 2022,~~March 31, 2023, the Company had ~~available~~a total capacity of approximately $1.864 billion of lines of credit ~~of approximately $1.848 billion~~ with various financial institutions, in addition to the ~~$1.489~~$1.465 billion of capacity under the Credit Facility. There were total draw downs of approximately ~~$215~~$609 million pursuant to these lines of credit as of ~~September 30, 2022,~~March 31, 2023, including approximately ~~$204~~$588 million related to the issuance of commercial paper. Refer to Note 8 for additional information.

Litigation

The Company assesses contingencies related to litigation and/or other matters to determine the degree of probability and range of possible loss. A loss contingency is accrued in the Company’s Consolidated Financial Statements if it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly sensitive and requires judgments about future events. On at least a quarterly basis, the Company reviews contingencies related to litigation to determine the adequacy

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of accruals. The amount of ultimate loss may differ from these estimates and further events may require the Company to increase or decrease the amounts it has accrued on any matter.

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

Litigation Matters

On August 12, 2019, Marc Jansen filed a putative securities class action against IFF, its then Chairman and CEO, and its then-CFO, in the United States District Court for the Southern District of New York. The lawsuit was filed after IFF disclosed that preliminary results of investigations indicated that Frutarom businesses operating principally in Russia and Ukraine had made improper payments to representatives of customers. On March 16, 2020, an amended complaint was filed, which added Frutarom and certain former officers of Frutarom as defendants. The amended complaint alleges, among other things, that defendants made materially false and misleading statements or omissions concerning IFF’s acquisition of Frutarom, the integration of the two companies, and the companies’ financial reporting and results. The amended complaint asserts claims under Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5, and under the Israeli Securities Act-1968, against all defendants, and under Section 20(a) of the Securities Exchange Act of 1934 against the individual defendants, on behalf of a putative class of persons and entities who purchased or otherwise acquired IFF securities on the New York Stock Exchange between May 7, 2018 and August 12, 2019 and persons and entities who purchased or otherwise acquired IFF securities on the Tel Aviv Stock Exchange between October 9, 2018 and August 12, 2019. The amended complaint seeks an award of unspecified compensatory damages, costs, and expenses. IFF, its officers, and Frutarom filed a motion to dismiss the case on June 26, 2020, which was granted on March 30, 2021. On April 28, 2021, lead plaintiffs filed a notice of appeal to the United States Court of Appeals for the Second Circuit. Lead plaintiffs are pursuing the appeal only against Frutarom and certain former officers of Frutarom. The parties have submitted their briefs to the Court of Appeals. The Second Circuit held oral argument on February 10, 2022. On September 30, 2022, the Second Circuit affirmed the dismissal of Plaintiffs' claims. On October 14, 2022, Plaintiffs filed a Petition for Rehearing En Banc,, which the Second Circuit denied on January 4, 2023. Plaintiffs did not seek review in the United States Supreme Court. The matter is ~~currently pending.~~therefore fully resolved in defendants’ favor.

Two motions to approve securities class actions were filed in the Tel Aviv District Court, Israel, in August 2019, similarly alleging, among other things, false and misleading statements largely in connection with IFF’s acquisition of Frutarom and the above-mentioned improper payments. One motion (“Borg”) asserts claims under the U.S. federal securities laws against IFF, its former Chairman and CEO, and its former CFO. On November 8, 2020, IFF and its officers filed their response to the Borg motion. On April 20, 2021, Mr. Borg filed a motion to stay the proceeding pending an appellate decision in the U.S. proceeding. On June 15, 2021, August 11, 2021, November 9, 2021, January 9, 2022, April 7, 2022 and July 10, 2022, the U.S. lead plaintiffs filed update notices with the Israeli court regarding the appeal in the U.S. proceeding. The other motion (“Oman”) (following an initial amendment) asserted claims under the Israeli Securities Act-1968 against IFF, its former Chairman and CEO, and its former CFO, and against Frutarom and certain former Frutarom officers and directors, as well as claims under the Israeli Companies Act-1999 against certain former Frutarom officers and directors. On February 17, 2021, the court granted a motion by the Oman plaintiff to remove IFF and its officers from the motion and to add factual allegations from the US amended complaint. The amended Oman motion was filed on July 4, 2021. On August 29, 2021, the former Frutarom officers and certain former Frutarom directors filed a motion to dismiss the case. On September 30, 2021, Frutarom notified the court that it joins the legal arguments made in the motion to dismiss. On February 22, 2022, the court denied the motion to dismiss. On July 14, 2022, the court approved the parties’ motion to mediate the dispute, which postpones all case deadlines until after the mediation. ~~Also stayed is~~In addition, a request to appeal the court’s denial of the motion to dismiss filed by the former Frutarom officers and certain former Frutarom ~~directors.~~directors has been stayed. The parties held the first of multiple mediation meetings on September 13, ~~2022.~~2022, November 22, 2022 and March 1, 2023.

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.

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On March 11, 2020, an IFF shareholder filed a motion to approve a class action in Israel against, among others, Frutarom, Yehudai, and Frutarom’s former board of directors, alleging that former minority shareholders of Frutarom were harmed as a result of the US $20 million bonus paid to Yehudai. The parties to this motion agreed to attempt to resolve the dispute through mediation to take place regarding the aforesaid claim against Yehudai. On July 27, 2021, counsel to the movant in the class action filed a notice with the court that the mediation process ended without an agreement. On August 26, 2021, a motion to dismiss the class action application was filed by Yehudai and certain former directors of Frutarom. On September 9, 2021, an additional motion to dismiss was filed by other former directors of Frutarom together with ICC Industries, Inc. and its affiliates. On December 9, 2021, the court denied the motions to dismiss. Responses to the class action motion were filed in May 2022, and applicant’s response was filed in December 2022.

~~Investigation~~On March 8, 2023, March 13, 2023, and April 18, 2023, three putative class action lawsuits were 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 and the United States District Court for the District of New Jersey, respectively. IFF understands that 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. IFF may face additional civil suits, in the United States or elsewhere, relating to such alleged conduct. At this time, IFF is unable to predict the potential outcome of these lawsuits or any potential effect they may have on the Company’s results of operations, liquidity or financial condition.

Investigations

On June 3, 2020, the Israel Police’s National Fraud Investigation Unit and the Israeli Securities Authority commenced an investigation into Frutarom and certain of its former executives, based on suspected bribery of foreign officials, money laundering, and violations of the Israeli Securities Act-1968. As part of the investigation, the National Fraud Investigation Unit and the Israeli Securities Authority have provided IFF and Frutarom with various orders, mainly requesting that IFF and Frutarom provide certain documents and materials. In addition, a seizure of assets was imposed on Frutarom and certain of its affiliates. IFF has been working to ensure compliance with such orders, all in accordance with, and subject to, Israeli law. On August 25, 2021, the Israeli Police informed Frutarom that they have decided to remove the temporary criminal seizure of assets order from the real estate assets of Frutarom and its related companies, which was done in parallel with the transfer of the case to the District Attorney’s Office in Israel.

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 to be investigating potential anticompetitive conduct as it relates to IFF’s fragrance businesses. IFF has been and intends to continue cooperating with these investigations. IFF is unable, however, to predict or determine at this time the scope, 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.

China Facilities

Guangzhou Taste Plant

During the fourth quarter of 2016, the Company was notified that certain governmental authorities have begun to evaluate a change in the zoning of the Guangzhou Taste plant. The zoning, if changed, would not affect the current operations, but would prevent expansions or other increases in the ~~Company from continuing to manufacture product at~~operating capacity of the ~~existing~~ plant. The ultimate outcome of any change that the governmental authorities may propose, the timing of such a change, and the nature of any compensation arrangements that might be provided to the Company are uncertain. To address the governmental authorities’ requirements, the Company has been transferring certain production capabilities from the Guangzhou Taste plant to a newly built facility in Zhangjiagang.

The net book value of the Guangzhou and Zhangjiagang Taste ~~plant~~plants was approximately ~~$50~~$51 million and $37 million as of ~~September 30, 2022.~~March 31, 2023.

Guangzhou Scent Plant

During the second quarter of 2019, the Company was notified that certain governmental authorities had changed the zoning where the Guangzhou Scent plant is located. The zoning change did not affect the current operations but prevents expansions or other increases in the operating capacity of the plant. The Company believes that it is possible that the zoning may be enforced in the future such that it would not be able to continue manufacturing at the existing site. The ultimate outcome of any change that the governmental authorities may propose, the timing of such a change, and the nature of any compensation arrangements that might be provided to the Company are uncertain. To address the governmental authorities’ requirements, the Company has been transferring certain production capabilities from the Guangzhou Scent plant to the plant in Jiande, China.

The net book value of the Guangzhou Scent plant and the plant in Jiande, China was approximately $7 million and $58 million as of ~~September 30, 2022.~~March 31, 2023.

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Zhejiang Ingredients Plant

In the fourth quarter of 2017, the Company concluded discussions with the government regarding the relocation of its Fragrance Ingredients plant in Zhejiang and, based on the agreements reached, expects to receive total compensation payments up to approximately $50 million. The relocation compensation will be paid to the Company over the period of the ~~relocation which is expected to be through the end of 2022.~~relocation. The Company received payments totaling $30 million through the end of 2019. ~~In the third quarter of 2020, the Company received a payment of approximately $13 million. A final payment is expected to be received upon completion of the final environmental inspection.~~

Production at the facility ceased during 2019. In the second quarter of 2020, the Company transferred ownership of the site to the ~~government. The land remediation activities are in progress~~government and ~~are expected to be completed in the second half of 2022. During the second quarter of 2020,~~ the remaining net book value of the plant was written off. In the third quarter of 2020, the Company received a payment of approximately $13 million. A final payment is now expected to be received in May 2023 upon final delivery of the land to the government.

The land remediation activities were completed in November 2022, however the Company is still in process of completing the final land restoration activities to restore the land to its original height, per the government’s request. This process is now expected to be completed in April 2023 and final delivery of the land to the government is now expected to be completed in May 2023.

Total China Operations

The total net book value of all plants in China was approximately ~~$235~~$242 million as of ~~September 30, 2022.~~March 31, 2023.

If the Company is required to close a plant, or operate one at significantly reduced production levels on a permanent basis, the Company may be required to record charges that could have a material impact on its consolidated financial results of operations, financial position and cash flows in future periods.

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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. On May 27, 2022, the Solae, LLC Memphis site (“Solae”) was served an Administrative Order and Assessment (the “Order”) by the City of Memphis related to alleged wastewater discharge violations. Solae submitted an appeal of the Order on June 24, 2022. Discussions with the City regarding potential resolution of the violations and penalties related to said violations are ongoing. ~~While these discussions are progressing, Solae is preparing to present its appeal at a hearing before a review board that may take place in early December 2022.~~ Additionally, the Solae facility has undertaken capital project efforts, some of which began prior to the issuance of the Order, that are anticipated to address, on a schedule consistent with the Order, deadlines 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 $17 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.

Brazil Tax Credits

In 2017 the Brazilian Supreme Court (“BSC”) ruled that Brazilian tax authorities should not include a value added tax known as “ICMS” in the calculation of certain indirect taxes (“PIS/COFINS”). By removing the ICMS from the calculation of the indirect tax base, the Court effectively eliminated a “tax on tax”. The Brazilian tax authorities filed an appeal seeking clarification of certain matters, including the amount of ICMS to which taxpayers would be entitled in order to reduce their indirect tax base (i.e. the gross rate or the net rate). In light of the BSC’s decision, in November 2017, the Company filed suit consistent with the BSC decision to require that ICMS be excluded from the PIS/COFINS calculation and received a favorable preliminary decision that was confirmed by the BSC in September 2018. This preliminary ruling granted the Company the right to prospectively exclude ICMS amounts from the PIS/COFINS calculation, but left open the issue of whether the Company could recover the gross or net amount of ICMS amounts paid on PIS/COFINS for the period from November 2011 to December 2018.

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In January 2020, the Company was informed of a favorable ruling from the Brazilian tax authorities confirming that the Company was entitled to recover the overpayments of certain indirect taxes (known as PIS/COFINS) for the period from November 2011 to December 2018, plus interest on the amount of the overpayments. ~~The overpayments arose from the inclusion of a value added tax known as ICMS in the calculation of the PIS/COFINS tax.~~ The ruling did not, however, settle the question of whether the Company is eligible to recover overpayments based on the gross or the net amount of ICMS amounts paid on PIS/COFINS. The Company calculated the amount of overpayments using the gross method which yields a higher amount than the application of the net method. ~~A final ruling on~~

In February 2023, the ~~gross versus net amount issue was~~BSC made byan unfavorable court resolution for the ~~Brazilian Supreme Court who affirmed~~Company related to the use of the gross ~~calculation with respect~~method, which was only granted to claims submitted prior to March 2017. ~~Although~~As a result of this unfavorable court resolution, the Company wrote off approximately $6 million of receivables related to this matter. As of March 31, 2023, the Company had not submitted a claim until after March 2017, the Company believes that the Supreme Court, whilst confirming the use of the gross method of calculation, does not override the January 2020 ruling by the Brazilian tax authorities with respectno receivables related to ~~the timeframe for the calculation.~~this matter.

Avicel® PH NF (Pharma Solutions)

The Company has determined that certain grades of microcrystalline cellulose (Avicel® PH 101, 102, and 200 NF and Avicel® RC-591 NF) were found to be out-of-specification (collectively, “OOS Avicel® NF”). The Company does not expect ~~this~~the OOS conductivity issue to affect the functionality of Avicel® NF grades or to pose a human health hazard. Corrective actions have been implemented to improve operational and laboratory conditions. Based on the information available, as of ~~September 30, 2022,~~March 31, 2023, payments associated with the issue were approximately $34 million, and the Company has a current accrual of approximately $19 million. The total amount of exposure may increase if additional customers present claims or other exposures are identified.

Other

The Company determines estimates of reasonably possible losses or ranges of reasonably possible losses in excess of related accrued liabilities, if any, when it has determined that either a loss is reasonably possible or a loss in excess of accrued amounts is reasonably possible and the amount of losses or range of losses is determinable. For all third party contingencies (including labor, contract, technology, tax, product-related claims and business litigation), the Company currently estimates that the aggregate range of reasonably possible losses in excess of any accrued liabilities is $0 to approximately ~~$35~~$50 million. The estimates included in this amount are based on the Company’s analysis of currently available information and, as new information is obtained, these estimates may change. Due to the inherent subjectivity of the assessments and the unpredictability of outcomes of legal proceedings, any amounts accrued or included in this aggregate amount may not represent the ultimate loss to the Company from the matters in question. Thus, the Company’s exposure and ultimate losses may be higher or lower, and possibly significantly so, than the amounts accrued or the range disclosed above.

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NOTE 17. REDEEMABLE ~~NONCONTROLLING~~NON-CONTROLLING INTERESTS

Through certain subsidiaries of the Company’s Frutarom acquisition, there are certain ~~noncontrolling~~non-controlling interests that carry redemption features. The ~~noncontrolling~~non-controlling interest holders have the right, over a stipulated period of time, to sell their respective interests to Frutarom, and Frutarom has the option to purchase these interests (subject to the same timing). ~~These~~In most cases, these options carry ~~in most cases,~~ similar price and conditions of exercise, and will be settled on a pre-agreed formula based on a multiple of the average EBITDA of consecutive quarters to be achieved during the period ending prior to the exercise date.

The following table sets forth the details of the Company’s redeemable ~~noncontrolling~~non-controlling interests:


(DOLLARS IN MILLIONS)	Redeemable ~~Noncontrolling~~Non-controlling Interests
~~Balance at December 31, 2020~~	$	98

~~Impact of foreign exchange translation~~	2
~~Share of profit or loss attributable to redeemable noncontrolling interests~~	4
~~Redemption value adjustment for the current period~~	1



~~Balance at September 30, 2021~~	$	~~105~~

Balance at December 31, 2021	$	105

Impact of foreign exchange translation	(4)





~~Share of profit or loss attributable to redeemable noncontrolling interests~~Balance at March 31, 2022	3$	101

~~Redemption value adjustment for the current period~~Balance at December 31, 2022	~~(3)~~$	59


~~Exercises of redeemable noncontrolling interests~~	~~(33)~~




Balance at ~~September 30, 2022~~March 31, 2023	$	6859

NOTE 18. ASSETS AND LIABILITIES HELD FOR SALE

During the fourth quarter of 2022, the Company announced it had entered into an agreement to sell a portion of its Savory Solutions business, which is part of the Nourish segment. In addition, in the first quarter of 2023, the Company announced it had entered into an agreement to sell its Flavor Specialty Ingredients business within the Scent segment. Both transactions are subject to customary closing conditions and are expected to close in the second quarter and third quarter of 2023, respectively.

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The sales do not constitute a strategic shift of the Company’s operations and do not, and will not, have major effects on the Company’s operations and financial results; therefore, the transactions do not meet the discontinued operations criteria.

It was determined that the assets and liabilities of these businesses met the criteria to be presented as “held for sale.” As a result, as of March 31, 2023 and December 31, 2022, such assets and liabilities were classified as held for sale and are reported on the Consolidated Balance Sheets. The Company expects that the sale proceeds less costs to sell will exceed the preliminary estimate of the carrying value of the net assets for both businesses. The carrying value is subject to change based on developments leading up to the closing date.

Included in the Company’s Consolidated Balance Sheets as of March 31, 2023 and December 31, 2022 are the following carrying amounts of the assets and liabilities held for sale:


(DOLLARS IN MILLIONS)	March 31, 2023		December 31, 2022
Assets
Cash and cash equivalents	$	4	$	52
Trade receivables, net	86		85
Inventories	165		157
Property, plant and equipment, net	104		92
Goodwill	361		348
Other intangible assets, net	440		428
Operating lease right-of-use assets	20		13
Other assets	22		25
Total assets held-for-sale	$	1,202	$	1,200
Liabilities
Accounts payable	$	61	$	56
Deferred tax liability(1)	91		92
Other liabilities	64		64
Total liabilities held-for-sale	$	216	$	212

_______________________

(1)The Company is currently analyzing the tax impact of the sale transaction and has included preliminary numbers for the deferred tax liability, which are subject to further updates.

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~~NOTE 18. BUSINESS DIVESTITURE~~

~~Divestiture of Microbial Control~~

During the third quarter of 2021, the Company announced it had entered into an agreement to sell its Microbial Control business unit, which was a part of the Health & Biosciences segment. The Company acquired the Microbial Control business unit as part of the Merger with N&B.

The Company completed the divestiture of the Microbial Control business unit on July 1, 2022 and received cash proceeds of approximately $1.254 billion, of which approximately $36 million was attributable to future services to be provided under certain transition service agreements as described below. Certain transaction costs related to the divestiture of approximately $11 million, which was contingent upon the consummation of the divestiture, were determined to be direct costs to sell and, as such, were adjusted against the fair value of sales consideration. In addition, approximately $15 million of cash proceeds were held in escrow and will be released to the Company upon satisfaction of certain conditions. The sale consideration is subject to certain post-closing adjustments, which primarily relate to cash, indebtedness and working capital balances.

The Company entered into transition services agreements with the buyer for providing certain general accounting, information technology and other services up to 19 months following the date of the sale for minimal consideration. The fair value of these transition service agreements was determined to be approximately $36 million, which was adjusted against the sale consideration and recognized as deferred transition services income.

For the three and nine months ended September 30, 2022, the transition services income under the transition services agreements was approximately $6 million and was recognized as a reduction to the costs incurred to provide services under the transition service agreements, which was included in Selling and administrative expenses on the Consolidated Statements of (Loss) Income and Comprehensive Loss.

~~The following table summarizes the fair value of the sale consideration received in connection with the divestiture:~~


~~(DOLLARS IN MILLIONS)~~
~~Cash proceeds from the buyer~~	$	~~1,254~~
~~Amount held in escrow~~	15
~~Proceeds attributable to transition service agreements~~	~~(36)~~
~~Direct costs to sell~~	~~(11)~~
~~Fair Value of sale consideration~~	$	~~1,222~~

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The net proceeds received from 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 reduced by the amount held in escrow and the Cash transferred to the buyer on the closing balance sheet as part of the transaction. The following table summarizes the different components of net proceeds received from business divestiture presented under Cash flows from investing activities:


~~(DOLLARS IN MILLIONS)~~
~~Fair value of sale consideration~~	$	~~1,222~~
~~Amount held in escrow~~	~~(15)~~
~~Cash transferred to the buyer on the closing balance sheet~~	~~(49)~~
~~Net proceeds received from business divestiture~~	$	~~1,158~~

~~The carrying amount of net assets associated with the Microbial Control business unit was approximately $1.208 billion. The major classes of assets and liabilities sold consisted of the following:~~


~~(DOLLARS IN MILLIONS)~~	~~June 30, 2022~~
~~Assets~~
~~Current assets~~	$	~~263~~
~~Goodwill and other intangible assets, net~~	~~867~~
~~Equity method investment~~	74
~~Other assets~~	80
~~Total assets~~	$	~~1,284~~
~~Liabilities~~
~~Accounts payable~~	$	41
~~Other liabilities~~	35
~~Total liabilities~~	$	76

As a result of the divestiture, the Company recognized a pre-tax gain of approximately $14 million, subject to certain post-closing adjustments, presented in other income, net on the Consolidated Statements of (Loss) Income and Comprehensive Loss for the three and nine months ended September 30, 2022. The Company also recognized the income tax effects associated with the divestiture of approximately $110 million based on preliminary estimates as of September 30, 2022.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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

The following management’s discussion and analysis should be read in conjunction with the management’s discussion and analysis of financial condition and results of operations, liquidity and capital resources included in our ~~2021~~2022 Annual Report on Form 10-K (“~~2021~~2022 Form 10-K”).

OVERVIEW

Company Background

~~On February 1, 2021,~~With the ~~Company completed its~~ Merger with ~~Nutrition & Biosciences, Inc. (“~~N~~&B”), a subsidiary of DuPont formed to hold the Nutrition~~&B in 2021 and Biosciences business (the “N&B Business”, and such transaction, the “N&B Transaction”) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”) with DuPont de Nemours, Inc. (“DuPont”). The shares issued in the Merger represented approximately 55.4% of the common stock of IFF on a fully diluted basis, after giving effect to the Merger, as of February 1, 2021.

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

We are organized into four reportable operating segments: Nourish, Health & Biosciences, Scent and Pharma Solutions. The Company’s consolidated financial information for the three and nine months ended September 30, 2022 reflect the results of N&B for the full three and nine months in the period ended September 30, 2022, respectively, whereas the three and nine months ended September 30, 2021 reflect three and eight months of results of N&B in the period ended September 30, 2021, respectively.

Our Nourish segment consists of an innovative and broad portfolio of natural-based ingredients to enhance nutritional value, texture and functionality in a wide range of beverage, dairy, bakery, confectionery and culinary ~~applications.~~applications and consists of three business units: Ingredients, Flavors and Food Designs.

Our Health & Biosciences segment consists of ~~a biotechnology-driven~~the development and production of an advanced biotechnology-derived portfolio ~~where~~of enzymes, food cultures, probiotics and specialty ingredients for food and non-food applications. Among many other applications, ~~are developed and produced. The~~this biotechnology-driven portfolio ~~of this segment produces~~includes cultures for use in fermented foods such as yogurt, cheese and fermented ~~beverages. It also uses~~beverages, probiotic strains, many with documented clinical health claims for use as dietary supplements and through industrial fermentation ~~to produce~~the production of enzymes and microorganisms that provide product and process performance benefits to household detergents, animal feed, ethanol production and brewing. Health & Biosciences is comprised of five business units: Health, Cultures & Food Enzymes, Home & Personal Care, Animal Nutrition and Grain Processing.

Our Scent segment creates fragrance compounds, fragrance ingredients and cosmetic ingredients that are integral elements in the world’s finest perfumes and best-known household and personal care products. Consumer insights science and creativity are at the heart of our Scent business, and, along with our unique portfolio of natural and synthetic ingredients, global footprint, innovative technologies and know-how, and customer intimacy, we believe make us a market leader in scent products. The Scent segment is comprised of three business units: Fragrance Compounds, Fragrance Ingredients and Cosmetic Actives.

Our Pharma Solutions segment produces, among other things, a vast portfolio of cellulosics and seaweed-based pharmaceutical excipients, used to improve the functionality and delivery of active pharmaceutical ingredients, including controlled or modified drug release formulations, and enabling the development of more effective pharmaceutical finished dosage formulations. Our excipients are used in prescription and over-the-counter pharmaceuticals and dietary supplements. Our Pharma Solutions products also serve a variety of other specialty and industrial end-uses including coatings, inks, electronics, agriculture, and consumer products.

Financial Measures — Currency Neutral

Changes in our financial results include the impact of changes in foreign currency exchange rates. We provide currency neutral calculations in this report to remove the impact of these items. Our method in calculating currency neutral numbers is conducted by translating current year invoiced sale amounts at the exchange rates used for the corresponding prior year period. We use currency neutral results in our analysis of subsidiary and/or segment performance. We also use currency neutral numbers when analyzing our performance against our competitors.

We are presenting currency neutral numbers for all operating segments for the three months ended September 30, 2022, but will not be presenting currency neutral numbers for the Nourish, Health & Biosciences and Pharma Solutions operating segments for the nine months ended September 30, 2022 as these operating segments include the effects of the Merger with N&B, which closed on February 1, 2021. As a result, the nine months ended September 30, 2022 reflect the results of N&B for the full nine months in the third quarter of 2022, whereas the nine months ended September 30, 2021 reflect eight months of results of N&B in the third quarter of 2021, which do not present equally comparable periods.

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~~Impairment of Goodwill~~

For the third quarter of 2022, we determined that goodwill impairment triggering events occurred for our Nourish, Health & Biosciences and Pharma Solutions reporting units, which required us to complete an interim impairment assessment. The primary indicators that were deemed to be triggering events in the quarter for the reporting units were declines in projections across various reporting units and ongoing adverse macroeconomic impacts such as inflation, increases in interest rates and unfavorable effects from exchange rates.

As a result of the triggering events, we assessed the fair value of the reporting units using an income approach. Under the income approach, we determine the fair value by using a discounted cash flow method at a rate of return that reflects the relative risk of the projected future cash flows of each reporting unit, as well as a terminal value. We use the most current actual and forecasted operating data available. Key estimates and assumptions used in these valuations include revenue growth rates, gross margins, EBITDA margins, terminal growth rates and discount rates.

In performing the quantitative impairment test, we determined that the fair value of the Nourish and Pharma Solutions reporting units exceeded its carrying value, and determined that there was no impairment of goodwill relating to these reporting units. The Pharma Solutions reporting unit had excess fair value over carrying value of less than 10% and goodwill of approximately $1.188 billion. We determined that the carrying value of the Health & Biosciences reporting unit exceeded its fair value and recorded a goodwill impairment charge of $2.250 billion in the Consolidated Statements of (Loss) Income and Comprehensive Loss for the three and nine months ended September 30, 2022 (see Note 6 for additional information).

While we believe that the assumptions used in the impairment test were reasonable, changes in key assumptions, including, lower revenue growth, lower gross margin, lower EBITDA margin, lower terminal growth rates or increasing discount rates could result in a future impairment and we may be required to write-off the remainder of, or a portion of, the remaining goodwill. Such charge could have a material effect on our Consolidated Statements of Operations and Balance Sheets. These estimates and assumptions are considered Level 3 inputs under the fair value hierarchy.

Impact of the Events in Russia and Ukraine

We maintain operations in both Russia and Ukraine and, additionally, export products to customers in Russia and Ukraine from operations outside the region. In response to the events in Ukraine, we have limited the production and supply of ingredients in and to Russia to only those that meet the essential needs of people, including food, hygiene and medicine.

~~In 2021,~~For the year ended December 31, 2022, total sales to Russian customers were approximately 2% of total sales. For ~~each of~~ the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023, sales to Russian customers were also approximately ~~also~~ 2% of total sales.

~~In 2021,~~For the year ended December 31, 2022, total sales to Ukrainian customers were less than 1% of total sales. For ~~each of~~ the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023, sales to Ukrainian customers were also less than 1% of total sales.

~~During the second quarter~~

Table of ~~2022, we recorded~~Contents

We have a ~~charge~~reserve of approximately ~~$120 million related to the impairment of certain long-lived assets in Russia. In addition, we recorded a charge of approximately $11~~$3 million related to expected credit losses on receivables from customers located in Russia and ~~Ukraine (for export and domestic sales).~~Ukraine. For additional information, refer to Note 1 ~~to the Consolidated Financial Statements~~ and Part I, Item 1A, “Risk Factors,” of our ~~2021~~2022 Form 10-K filed on February ~~28, 2022~~27, 2023 with the SEC.

Impact of COVID-19 Pandemic

On March 11, 2020, the World Health Organization designated COVID-19 as a global pandemic. Various policies and initiatives have been implemented around the world to reduce the global transmission of COVID-19. Although there continue to be minor disruptions, all of IFF’s manufacturing facilities remain open and continue to manufacture products.

The COVID-19 pandemic remains a serious threat to the health of the world’s population and certain countries and regions continue to suffer from outbreaks or have seen a recurrence of infections, especially with the emergence of new variants of the virus. Accordingly, the Company continues to take the threat from COVID-19 seriously. The impact that COVID-19 will have on our consolidated results of operations for the remainder of 2022 remains uncertain. Due to the length and severity of COVID-19, there is continued volatility as a result of retail and travel, consumer shopping and consumption behavior. Moreover, asAs a result of disruptions or uncertainty relating to the COVID-19 pandemic, we ~~are experiencing,~~have experienced, and may continue to experience, increased costs, delays or limited availability related to raw materials, strain on shipping and transportation resources, and higher energy prices, which have negatively impacted, and may continue to negatively impact, our margins and operating results. We will continue to evaluate the nature and extent of these potential impacts to our business, consolidated results of operations, segment results, liquidity and capital resources.

Although IFF has not experienced and does not currently anticipate any impairment charges related to COVID-19, the continuing effects of a prolonged pandemic could result in increased risk of asset write-downs and impairments. Any of these events could potentially result in a material adverse impact on IFF’s business and results of operations.

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For more detailed information about risks related to COVID-19, refer to Part I, Item 1A, “Risk Factors,” of our ~~2021~~2022 Form 10-K filed on February ~~28, 2022~~27, 2023 with the SEC.

Financial Performance Overview

Sales

Sales in the ~~third~~first quarter of ~~2022~~2023 decreased $8$199 million, or ~~0.3%~~6% on a reported basis, to ~~$3.063~~$3.027 billion compared to ~~$3.071~~$3.226 billion in the ~~2021~~2022 period. On a currency neutral basis, sales in the ~~third~~first quarter of ~~2022 increased 6%~~2023 decreased 2% compared to the ~~2021~~2022 period. Exchange rate variations had an unfavorable impact on net sales for the ~~third~~first quarter of ~~2022~~2023 of 6%4%. The effect of exchange rates can vary by business and region, depending upon the mix of sales priced in U.S. dollars as compared to other currencies. In addition, the decrease in sales was primarily driven by volume decreases across various businesses and the net impact of the divestiture of the Microbial Control business unit and acquisition of Health Wright Products, Inc. (“change in business portfolio mix”), which was approximately ~~$89~~$111 million, ~~and volume decreases,~~ offset in part by price increases across all businesses.

Gross Profit

Gross profit in the ~~third~~first quarter of ~~2022~~2023 decreased ~~$89~~$181 million, or 8%16% on a reported basis, to ~~$1.001 billion (32.7%~~$964 million (31.8% of sales) compared to ~~$1.090~~$1.145 billion (35.5% of sales) in the ~~2021~~2022 period. The decrease in gross profit was primarily driven by ~~higher costs of goods sold as a result of higher commodity prices and manufacturing costs,~~volume decreases, the change in business portfolio mix and ~~volume decreases, offset in part by favorable net pricing across various businesses.~~

~~Adjusted Operating EBITDA~~

~~Adjusted operating EBITDA in the third quarter of 2022 decreased $36 million, or 6% on a reported basis,~~unfavorable manufacturing absorption related to $612 million (20.0% of sales) compared to $648 million (21.1% of sales) in the comparable 2021 period. On a currency neutral basis, adjusted operating EBITDA in the third quarter of 2022 increased 2% compared to the 2021 period. Exchange rate variations had an unfavorable impact on adjusted operating EBITDA for the third quarter of 2022 of 8%. In addition, the decrease in adjusted operating EBITDA was driven by volume decreases and the change in business portfolio mix,our inventory reduction program, offset in part by favorable net pricing across various businesses.

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RESULTS OF OPERATIONS


		Three Months Ended								Nine Months Ended									Three Months Ended
		September 30,								September 30,									March 31,
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)	(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)	2022			2021			Change		2022			2021			Change		(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)	2023			2022			Change
Net sales	Net sales	$	3,063		$	3,071		—	%	$	9,596		$	8,625		11	%	Net sales	$	3,027		$	3,226		(6)	%
Cost of goods sold	Cost of goods sold	2,062			1,981			4	%	6,314			5,871			8	%	Cost of goods sold	2,063			2,081			(1)	%
Gross profit	Gross profit	1,001			1,090			(8)	%	3,282			2,754			19	%	Gross profit	964			1,145			(16)	%
Research and development (R&D) expenses	Research and development (R&D) expenses	145			156			(7)	%	460			463			(1)	%	Research and development (R&D) expenses	161			157			3	%
Selling and administrative (S&A) expenses	Selling and administrative (S&A) expenses	413			436			(5)	%	1,328			1,299			2	%	Selling and administrative (S&A) expenses	454			459			(1)	%
Amortization of acquisition-related intangibles	Amortization of acquisition-related intangibles	182			195			(7)	%	552			547			1	%	Amortization of acquisition-related intangibles	171			186			(8)	%
Impairment of goodwill		2,250			—			NMF		2,250			—			NMF
Impairment of long-lived assets		—			—			NMF		120			—			NMF

Restructuring and other charges	Restructuring and other charges	(4)			6			(167)	%	5			34			(85)	%	Restructuring and other charges	52			2			NMF
Gains on sales of fixed assets		—			(1)			(100)	%	(2)			(1)			100	%
Operating (loss) profit		(1,985)			298			NMF		(1,431)			412			NMF
Gains on sale of fixed assets																		Gains on sale of fixed assets	(5)			—			NMF
Operating profit																		Operating profit	131			341			(62)	%
Interest expense	Interest expense	83			74			12	%	232			216			7	%	Interest expense	111			72			54	%

Other income, net		(33)			(26)			27	%	(43)			(44)			(2)	%
(Loss) Income before taxes		(2,035)			250			NMF		(1,620)			240			NMF
Other expense (income), net																		Other expense (income), net	6			(16)			(138)	%
Income before taxes																		Income before taxes	14			285			(95)	%
Provision for income taxes	Provision for income taxes	160			53			202	%	220			53			NMF		Provision for income taxes	22			39			(44)	%
Net (loss) income	Net (loss) income	$	(2,195)		$	197		NMF		$	(1,840)		$	187		NMF		Net (loss) income	$	(8)		$	246		(103)	%
Net income attributable to noncontrolling interests		2			3			(33)	%	6			7			(14)	%
Net income attributable to non-controlling interests																		Net income attributable to non-controlling interests	1			2			(50)	%
Net (loss) income attributable to IFF shareholders	Net (loss) income attributable to IFF shareholders	$	(2,197)		$	194		NMF		$	(1,846)		$	180		NMF		Net (loss) income attributable to IFF shareholders	$	(9)		$	244		(104)	%
Net (loss) income per share - diluted	Net (loss) income per share - diluted	$	(8.60)		$	0.76		NMF		$	(7.22)		$	0.75		NMF		Net (loss) income per share - diluted	$	(0.04)		$	0.96		(104)	%
Gross margin	Gross margin	32.7		%	35.5		%	(280)	bps	34.2		%	31.9		%	230	bps	Gross margin	31.8		%	35.5		%	NMF
R&D as a percentage of sales	R&D as a percentage of sales	4.7		%	5.1		%	(40)	bps	4.8		%	5.4		%	(60)	bps	R&D as a percentage of sales	5.3		%	4.9		%	40	bps
S&A as a percentage of sales	S&A as a percentage of sales	13.5		%	14.2		%	(70)	bps	13.8		%	15.1		%	(130)	bps	S&A as a percentage of sales	15.0		%	14.2		%	80	bps
Operating margin	Operating margin	(64.8)		%	9.7		%	NMF		(14.9)		%	4.8		%	NMF		Operating margin	4.3		%	10.6		%	NMF

Effective tax rate	Effective tax rate	(7.9)		%	21.2		%	NMF		(13.6)		%	22.1		%	NMF		Effective tax rate	157.1		%	13.7		%	NMF
Segment net sales	Segment net sales																	Segment net sales
Nourish	Nourish	$	1,703		$	1,662		2	%	$	5,252		$	4,638		13	%	Nourish	$	1,653		$	1,731		(5)	%
Health & Biosciences	Health & Biosciences	512			618			(17)	%	1,838			1,683			9	%	Health & Biosciences	513			661			(22)	%
Scent	Scent	591			580			2	%	1,756			1,699			3	%	Scent	608			585			4	%
Pharma Solutions	Pharma Solutions	257			211			22	%	750			605			24	%	Pharma Solutions	253			249			2	%
Consolidated	Consolidated	$	3,063		$	3,071				$	9,596		$	8,625				Consolidated	$	3,027		$	3,226

_______________________

NMF: Not meaningful

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

~~Table of Contents~~

~~THIRD~~FIRST QUARTER ~~2022~~2023 IN COMPARISON TO ~~THIRD~~FIRST QUARTER ~~2021~~2022

Sales

Sales for the ~~third~~first quarter of ~~2022~~2023 decreased $8$199 million, or ~~0.3%~~6% on a reported basis, to ~~$3.063~~$3.027 billion, compared to ~~$3.071~~$3.226 billion in the prior year period. On a currency neutral basis, sales in the ~~third~~first quarter of ~~2022 increased 6%~~2023 decreased 2% compared to the ~~2021~~2022 period. Exchange rate variations had an unfavorable impact on net sales for the ~~third~~first quarter of ~~2022~~2023 of 6%4%. The effect of exchange rates can vary by business and region, depending upon the mix of sales priced in U.S. dollars as compared to other currencies. In addition, the decrease in sales was primarily driven by volume decreases across various businesses and the change in business portfolio mix, with a net impact of approximately ~~$89~~$111 million, ~~and volume decreases,~~ offset in part by price increases across all businesses.

Table of Contents

Sales Performance by Segment


		% Change in Sales - Third Quarter 2022 vs. Third Quarter 2021					% Change in Sales - First Quarter 2023 vs. First Quarter 2022
		Reported		Currency Neutral(1)			Reported		Currency Neutral(1)
Nourish	Nourish	2	%	9	%	Nourish	-5	%	0	%
Health & Biosciences	Health & Biosciences	-17	%	-12	%	Health & Biosciences	-22	%	-19	%
Scent	Scent	2	%	9	%	Scent	4	%	8	%
Pharma Solutions	Pharma Solutions	22	%	28	%	Pharma Solutions	2	%	4	%
Total	Total	0	%	6	%	Total	-6	%	-2	%

_______________________

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

Nourish

Nourish sales in ~~2022 increased $41~~2023 decreased $78 million, or 2%5% on a reported basis, to ~~$1.703~~$1.653 billion compared to ~~$1.662~~$1.731 billion in the prior year period. On a currency neutral basis, Nourish sales ~~increased 9%~~were flat in ~~2022~~2023 compared to the prior year period. Performance in the Nourish operating segment was driven by ~~price increases, particularly in the Ingredients and Food Design~~volume decreases across all business units ~~offset in part by~~and unfavorable impacts from exchange rate variations, ~~and volume decreases.~~offset in part by price increases across all business units.

Health & Biosciences

Health & Biosciences sales in ~~2022~~2023 decreased ~~$106~~$148 million, or ~~17%~~22% on a reported basis, to ~~$512~~$513 million compared to ~~$618~~$661 million in the prior year period. On a currency neutral basis, Health & Biosciences sales decreased ~~12%~~19% in ~~2022~~2023 compared to the prior year period. Performance in the Health & Biosciences operating segment was driven by the change in business portfolio mix, with a net impact of approximately ~~$89~~$111 million, volume decreases and unfavorable impacts from exchange rate variations, ~~and volume decreases,~~ offset in part by price increases across ~~various~~all business units.

Scent

Scent sales in ~~2022~~2023 increased ~~$11~~$23 million, or 2%4% on a reported basis, to ~~$591~~$608 million, compared to ~~$580~~$585 million in the prior year period. On a currency neutral basis, Scent sales increased 9%8% in ~~2022~~2023 compared to the prior year period. Performance in the Scent operating segment was driven by price ~~and volume~~ increases primarily in the Fragrance Compounds and Fragrance Ingredients business units and volume increases in the Fragrance Compounds business unit, offset in part by unfavorable impacts from exchange rate variations.

Pharma Solutions

Pharma Solutions sales in ~~2022~~2023 increased ~~$46~~$4 million, or ~~22%~~2% on a reported basis, to ~~$257~~$253 million compared to ~~$211~~$249 million in the prior year period. On a currency neutral basis, Pharma Solutions sales increased ~~28%~~4% in ~~2022~~2023 compared to the prior year period. Performance in the Pharma Solutions operating segment was driven by price ~~and volume~~ increases, offset in part by volume decreases and unfavorable impacts from exchange rate variations.

Cost of Goods Sold

Cost of goods sold ~~increased $81~~decreased $18 million to ~~$2.062~~$2.063 billion ~~(67.3%~~(68.2% of sales) in the ~~third~~first quarter of ~~2022~~2023 compared to ~~$1.981~~$2.081 billion (64.5% of sales) in the ~~third~~first quarter of ~~2021.~~2022. The ~~increase~~decrease in cost of goods sold was primarily driven by ~~higher material costs, due to higher commodity prices,~~volume decreases in sales and ~~higher manufacturing expenses, offset in part by~~ the change in business portfolio mix, with a net impact of approximately ~~$75~~$80 million, ~~and volume decreases~~offset in ~~sales.~~

~~Table of Contents~~

part by unfavorable manufacturing absorption related to our inventory reduction program.

Research and Development (R&D) Expenses

R&D expenses ~~decreased $11~~increased $4 million to ~~$145~~$161 million ~~(4.7%~~(5.3% of sales) in the ~~third~~first quarter of ~~2022~~2023 compared to ~~$156~~$157 million ~~(5.1%~~(4.9% of sales) in the ~~third~~first quarter of ~~2021.~~2022. The ~~decrease~~increase in R&D expenses was primarily driven by ~~lower employee~~higher operating expenses for R&D related activities, offset in part by the change in business portfolio mix.

Selling and Administrative (S&A) Expenses

S&A expenses ~~including salaries, wages and bonuses, and~~decreased $5 million to $454 million (15.0% of sales) in the first quarter of 2023 compared to $459 million (14.2% of sales) in the first quarter of 2022. The decrease in S&A expenses was primarily driven by lower professional fees, including consulting costs, and the change in business portfolio mix, offset in part by higher operating expenses for ~~R&D~~S&A related activities.

~~Selling and Administrative (S&A) Expenses~~

~~S&A expenses decreased $23 million to $413 million (13.5%~~

Table of sales) in the third quarter of 2022 compared to $436 million (14.2% of sales) in the third quarter of 2021. The decrease in S&A expenses was primarily driven by lower employee related expenses, including salaries, wages and bonuses, and the change in business portfolio mix, offset in part by higher professional fees, including consulting costs.Contents

Restructuring and Other Charges

Restructuring and other charges ~~was a credit of $4~~increased to $52 million in the ~~third~~first quarter of ~~2022~~2023 compared to ~~an expense of $6~~$2 million in the ~~third~~first quarter of ~~2021.~~2022. The ~~decrease~~increase was ~~primarily~~ driven by higher severance costs incurred as part of the 2023 Restructuring Program, net of reversals of prior severance cost accruals, ~~and lower severance costs incurred~~ in the ~~third~~first quarter of ~~2022~~2023 (see Note 4 for additional information).

Amortization of Acquisition-Related Intangibles

Amortization expenses decreased to ~~$182~~$171 million in the ~~third~~first quarter of ~~2022~~2023 compared to ~~$195~~$186 million in the ~~third~~first quarter of ~~2021.~~2022. The decrease in amortization expense was primarily driven by the intangible assets of the portion of the Savory Solutions business and Flavor Specialty Ingredients business being classified as “held for sale,” and therefore no longer recognizing amortization expense on those intangible assets. In addition, the decrease was due to the reduction in intangible assets as a result of the divestiture of the Microbial Control business unit and an impairment of intangible assets of an asset group that operated primarily in Russia during 2022, offset in part by the impact of acquisitions of intangible assets from Health Wright Products, Inc. (see Note 3, Note 6 and Note 18 for additional information).

~~Impairment of Goodwill~~

~~Impairment of goodwill was $2.250 billion in the third quarter of 2022, which was related to the Health & Biosciences reporting unit. See Note 1 and Note 6 for additional information.~~

~~Impairment of Long-Lived Assets~~

~~There was no impairment of long-lived assets in the third quarter of 2022.~~

Interest Expense

Interest expense increased to ~~$83~~$111 million in the ~~third~~first quarter of ~~2022~~2023 compared to ~~$74~~$72 million in the ~~2021~~2022 period. The increase in interest expense was due to higher ~~cost~~effective interest rates on the outstanding Term Loan Facilities and an increase in draw downs of ~~debt~~commercial paper (see Note 8 for additional information). ~~Average~~In addition, the increase was due to higher interest rates, which led to an increase in the cost ~~of debt was 2.9%~~ for ~~the 2022 period compared to 2.5%~~participating in our factoring programs (see Note 1 for ~~the 2021 period.~~additional information).

Other ~~Income,~~Expense (Income), Net

In the ~~third~~first quarter of ~~2022,~~2023, we recognized other expense, net, of $6 million compared to other income, net, of ~~$33 million compared to $26~~$16 million in the ~~2021~~2022 period. The change of $7$22 million was primarily due to foreign exchange ~~gains~~losses in the ~~third~~first quarter of ~~2022~~2023 compared to foreign exchange ~~losses~~gains in the ~~2021~~2022 period, and ~~gain from divestiture~~losses incurred as part of the ~~Microbial Control~~liquidation of a business ~~unit,~~in Russia in preparation for the sale of the portion of the Savory Solutions business, offset in part by ~~lower pension~~higher interest income in the ~~third~~first quarter of ~~2022~~2023 compared to the ~~2021 period due to the adjustment to correct net income amounts related to certain defined benefit plans in prior years (see Note 13 for additional information).~~2022 period.

Income Taxes

The effective tax rate for the three months ended ~~September 30, 2022~~March 31, 2023 was ~~(7.9)%~~157.1% compared to ~~21.2%~~13.7% for the three months ended ~~September 30, 2021.~~March 31, 2022. The quarter-over-quarter ~~decrease~~increase was primarily driven by tax expenses relating to planned business divestitures and changes in the mix of income and losses, some of which do not give rise to tax benefits due to the recording of the tax effects of the divestiture of the Microbial Control business unit and book to tax differences related to the impairment of goodwill in the Health & Biosciences operating segment.valuation allowances.

Segment Adjusted Operating EBITDA Results by Business Unit

The Company uses Segment Adjusted Operating EBITDA for internal reporting and performance measurement purposes. Segment Adjusted Operating EBITDA is defined as Income Before Taxes before depreciation and amortization expense, interest expense, restructuring and other charges and certain non-recurring items. Our determination of reportable segments was made on the basis of our strategic priorities within each segment and corresponds to the manner in which our Chief Operating Decision Maker reviews and evaluates operating performance to make decisions about resources to be allocated to the segment. In addition to our strategic priorities, segment reporting is also based on differences in the products and services we provide.

3733

Table of Contents


		Three Months Ended September 30,							Three Months Ended March 31,
(DOLLARS IN MILLIONS)	(DOLLARS IN MILLIONS)	2022			2021			(DOLLARS IN MILLIONS)	2023			2022
Segment Adjusted Operating EBITDA:	Segment Adjusted Operating EBITDA:							Segment Adjusted Operating EBITDA:
Nourish	Nourish	$	287		$	327		Nourish	$	208		$	329
Health & Biosciences	Health & Biosciences	137			151			Health & Biosciences	131			192
Scent	Scent	119			130			Scent	105			116
Pharma Solutions	Pharma Solutions	69			40			Pharma Solutions	59			65
Total	Total	612			648			Total	503			702
Depreciation & Amortization	Depreciation & Amortization	(293)			(297)			Depreciation & Amortization	(276)			(303)
Interest Expense	Interest Expense	(83)			(74)			Interest Expense	(111)			(72)
Other Income, net		33			26
Acquisition Related Costs		(1)			—
Other (Expense) Income, net								Other (Expense) Income, net	(6)			16
Restructuring and Other Charges	Restructuring and Other Charges	4			(6)			Restructuring and Other Charges	(52)			(2)
Gains on sales of fixed assets		—			1
Impairment of Goodwill		(2,250)			—
Acquisition, Divestiture and Integration Related Costs								Acquisition, Divestiture and Integration Related Costs	(31)			(49)
Strategic Initiatives Costs								Strategic Initiatives Costs	(13)			—
Regulatory Costs								Regulatory Costs	(5)			—
Other								Other	5			(7)

Business Divestiture Costs		(31)			(16)
Employee Separation Costs		—			(22)
Global Shared Services Implementation Costs		(1)			—

N&B Inventory Step-Up Costs		—			14

Integration Related Costs		(25)			(24)
(Loss) Income Before Taxes		$	(2,035)		$	250

Income Before Taxes								Income Before Taxes	$	14		$	285
Segment Adjusted Operating EBITDA margin:	Segment Adjusted Operating EBITDA margin:							Segment Adjusted Operating EBITDA margin:
Nourish	Nourish	16.9		%	19.7		%	Nourish	12.6		%	19.0		%
Health & Biosciences	Health & Biosciences	26.8		%	24.4		%	Health & Biosciences	25.5		%	29.0		%
Scent	Scent	20.1		%	22.4		%	Scent	17.3		%	19.8		%
Pharma Solutions	Pharma Solutions	26.8		%	19.0		%	Pharma Solutions	23.3		%	26.1		%
Consolidated	Consolidated	20.0		%	21.1		%	Consolidated	16.6		%	21.8		%

Nourish Segment Adjusted Operating EBITDA

Nourish Segment Adjusted Operating EBITDA decreased ~~$40~~$121 million, or ~~12%~~37% on a reported basis, to ~~$287~~$208 million in the ~~third~~first quarter of ~~2022 (16.9%~~2023 (12.6% of segment sales) from ~~$327~~$329 million ~~(19.7%~~(19.0% of segment sales) in the comparable ~~2021~~2022 period. On a currency neutral basis, Nourish Segment Adjusted Operating EBITDA decreased 5%27% in 2022 compared to the prior year period. The decrease was primarily driven by volume decreases and unfavorable impacts from exchange rate variations, offset in part by favorable net pricing across various businesses.

~~Health & Biosciences Segment Adjusted Operating EBITDA~~

Health & Biosciences Segment Adjusted Operating EBITDA decreased $14 million, or 9% on a reported basis, to $137 million in the third quarter of 2022 (26.8% of segment sales) from $151 million (24.4% of segment sales) in the comparable 2021 period. On a currency neutral basis, Health & Biosciences Segment Adjusted Operating EBITDA decreased 4% in 20222023 compared to the prior year period. The decrease was primarily driven by volume decreases, unfavorable impacts from exchange rate variations and ~~the change in business portfolio mix.~~unfavorable manufacturing absorption related to our inventory reduction program.

~~The increase in~~ Health & Biosciences Segment Adjusted Operating EBITDA

Health & Biosciences Segment Adjusted Operating EBITDA ~~margin, as~~decreased $61 million, or 32% on a ~~percentage~~reported basis, to $131 million in the first quarter of ~~sales,~~2023 (25.5% of segment sales) from $192 million (29.0% of segment sales) in the comparable 2022 period. On a currency neutral basis, Health & Biosciences Segment Adjusted Operating EBITDA decreased 28% in 2023 compared to the prior year period. The decrease was primarily ~~due~~driven by volume decreases, the change in business portfolio mix, unfavorable impacts from exchange rate variations and unfavorable manufacturing absorption related to ~~favorable net pricing,~~our inventory reduction program, offset in part by ~~volume decreases.~~favorable net pricing.

Scent Segment Adjusted Operating EBITDA

Scent Segment Adjusted Operating EBITDA decreased $11 million, or 8%9% on reported basis, to ~~$119~~$105 million in the ~~third~~first quarter of ~~2022 (20.1%~~2023 (17.3% of segment sales) from ~~$130~~$116 million ~~(22.4%~~(19.8% of segment sales) in the comparable ~~2021~~2022 period. On a currency neutral basis, Scent Segment Adjusted Operating EBITDA increased 3%1% in ~~2022~~2023 compared to the prior year period. The decrease, on a reported basis, was primarily driven by unfavorable ~~impacts from exchange rate variations and unfavorable net pricing, offset in part by volume increases in Fragrance Compounds and Fragrance Ingredients.~~

~~Table of Contents~~

~~Pharma Solutions Segment Adjusted Operating EBITDA~~

Pharma Solutions Segment Adjusted Operating EBITDA increased $29 million, or 73% on a reported basis, to $69 million in the third quarter of 2022 (26.8% of segment sales) from $40 million (19.0% of segment sales) in the comparable 2021 period. On a currency neutral basis, Pharma Solutions Segment Adjusted Operating EBITDA increased 76% in 2022 compared to the prior year period. The increase was primarily driven by favorable net pricing and volume increases, offset in part by unfavorable impacts from exchange rate variations in the operating segment.

~~FIRST NINE MONTHS 2022 IN COMPARISON TO FIRST NINE MONTHS 2021~~

~~Sales~~

Sales for the first nine months of 2022 increased $971 million, or 11% on a reported basis, to $9.596 billion, compared to $8.625 billion in the 2021 period. Sales included approximately $568 million of incremental sales attributable to N&B for the month of January in the 2022 period. In addition, sales performance reflected price and volume increases across various businesses, offset in part by the change in business portfolio mix.

~~Sales Performance by Segment~~

% Change in Sales - First Nine Months 2022 vs. First Nine Months 2021
Reported
Currency Neutral(1)
Nourish 13 % NMF
Health & Biosciences 9 % NMF
Scent 3 % 8 %
Pharma Solutions 24 % NMF
Total 11 % NMF
~~_______________________~~

~~(1)Currency neutral sales growth is calculated by translating current year invoiced sale amounts at the exchange rates for the corresponding prior year period.~~

~~NMF: Not meaningful~~

~~Nourish~~

Nourish sales in 2022 increased $614 million, or 13% on a reported basis, to $5.252 billion compared to $4.638 billion in the prior year period. Nourish sales included approximately $293 million of incremental sales attributable to N&B for the month of January in the 2022 period. In addition, performance in the Nourish operating segment was driven by price increases, particularly in the Ingredients and Food Design business units, offset in part by volume decreases across various business units.

~~Health & Biosciences~~

Health & Biosciences sales in 2022 increased $155 million, or 9% on a reported basis, to $1.838 billion compared to $1.683 billion in the prior year period. Health & Biosciences sales included approximately $202 million of incremental sales attributable to N&B for the month of January in the 2022 period. The decrease in Health & Biosciences sales, excluding the impact of N&B for the month of January in the 2022 period, was primarily driven by the change in business portfolio mix, offset in part by price and volume increases across various business units.

~~Scent~~

Scent sales in 2022 increased $57 million, or 3% on a reported basis, to $1.756 billion, compared to $1.699 billion in the prior year period. On a currency neutral basis, Scent sales increased 8% in 2022 compared to the prior year period. Performance in the Scent operating segment was driven by volume and price increases, primarily in the Fragrance Compounds and Fragrance Ingredients business units, offset in part by unfavorable impacts from exchange rate variations.

~~Pharma Solutions~~

Pharma Solutions sales in 2022 increased $145 million, or 24% on a reported basis, to $750 million compared to $605 million in the prior year period. Pharma Solutions sales included approximately $73 million of incremental sales attributable to N&B for the month of January in the 2022 period. In addition, performance in the Pharma Solutions operating segment was primarily driven by price and volume increases.

~~Table of Contents~~

~~Cost of Goods Sold~~

Cost of goods sold increased $443 million to $6.314 billion (65.8% of sales) in the first nine months of 2022 compared to $5.871 billion (68.1% of sales) in the 2021 period. Cost of goods sold included approximately $389 million of incremental costs attributable to N&B for the month of January in the 2022 period. In addition, excluding the impact of N&B for the month of January in the 2022 period and the N&B inventory step-up costs from the prior year period, the increase in cost of goods sold was primarily driven by higher material costs, due to higher commodity prices, and volume increases in sales, offset in part by the change in business portfolio mix.

~~Research and Development (R&D) Expenses~~

R&D expenses decreased $3 million to $460 million (4.8% of sales) in the first nine months of 2022 compared to $463 million (5.4% of sales) in the 2021 period. R&D expenses included approximately $20 million of incremental expenses attributable to N&B for the month of January in the 2022 period, which consisted primarily of employee related expenses, including salaries, wages and bonuses and operating expenses for R&D related activities. In addition, excluding the impact of N&B for the month of January in the 2022 period, R&D expenses decreased primarily due to lower employee related expenses, including salaries, wages and bonuses, and professional fees, including consulting costs, offset in part by higher operating expenses for R&D related activities.

~~Selling and Administrative (S&A) Expenses~~

S&A expenses increased $29 million to $1.328 billion (13.8% of sales) in the first nine months of 2022 compared to $1.299 billion (15.1% of sales) in the 2021 period. S&A expenses included approximately $51 million of incremental expenses attributable to N&B for the month of January in the 2022 period, which consisted primarily of employee related expenses, including salaries, wages and bonuses, professional fees, including consulting costs, and operating expenses. In addition, excluding the impact of N&B for the month of January in the 2022 period, S&A expenses decreased primarily due to lower employee related expenses, including salaries, wages and bonuses, and professional fees, including consulting costs, offset in part by higher operating expenses for S&A related activities.

~~Restructuring and Other Charges~~

Restructuring and other charges decreased to $5 million in the first nine months of 2022 compared to $34 million in the first nine months of 2021. The decrease was primarily driven by lower severance costs incurred in the first nine months of 2022 (see Note 4 for additional information).

~~Amortization of Acquisition-Related Intangibles~~

Amortization expenses increased to $552 million in the first nine months of 2022 compared to $547 million in the 2021 period. Amortization expense included approximately $47 million attributable to N&B for the month of January in the 2022 period related to the intangible assets acquired through the Merger with N&B. Excluding the impact of N&B for the month of January in the 2022 period, the decrease in amortization expense was primarily driven by the reduction in intangible assets as a result of the divestiture of the Microbial Control business unit, offset in part by the impact of acquisitions of intangible assets from Health Wright Products, Inc. (see Note 3, Note 6 and Note 18 for additional information).

~~Impairment of Goodwill~~

~~Impairment of goodwill was $2.250 billion in the first nine months of 2022, which was related to the Health & Biosciences reporting unit. See Note 1 and Note 6 for additional information.~~

~~Impairment of Long-Lived Assets~~

Impairment of long-lived assets was $120 million in the first nine months of 2022. The impairment charge was due to the uncertainties related to our operations in Russia and Ukraine and was allocated on a pro rata basis to intangible assets and property, plant and equipment (see Note 1, Note 5 and Note 6 for additional information).

~~Interest Expense~~

Interest expense increased to $232 million in the first nine months of 2022 compared to $216 million in the 2021 period. Interest expense included approximately $13 million attributable to N&B for the month of January in the 2022 period, which included the impact of the additional debt assumed in the Merger with N&B (see Note 8 for additional information). Average cost of debt was 2.7% for the 2022 period compared to 3.1% for the 2021 period.

~~Table of Contents~~

~~Other Income, Net~~

In the first nine months of 2022, we recognized other income, net, of $43 million compared to $44 million in the comparable 2021 period. Other income, net includes approximately $6 million attributable to N&B for the month of January in the 2022 period. Excluding the impact of N&B for the month of January in the 2022 period, the decrease in other income, net was primarily due to lower pension income in the first nine months of 2022 compared to the 2021 period due to the adjustment during the 2021 period to correct net income amounts related to certain defined benefit plans in prior years (see Note 13 for additional information), offset in part by foreign exchange gains in the first nine months of 2022 compared to foreign exchange losses in the 2021 period and gain from divestiture of the Microbial Control business unit.

~~Income Taxes~~

The effective tax rate for the nine months ended September 30, 2022 was (13.6)% compared to 22.1% for the nine months ended September 30, 2021. The year-over-year decrease was primarily due to the recording of the tax effects of the divestiture of the Microbial Control business unit and book to tax differences related to the impairment of goodwill in the Health & Biosciences operating segment, offset in part by certain one-time benefits.

~~Segment Adjusted Operating EBITDA Results by Business Unit~~

~~Table of Contents~~

Nine Months Ended September 30,
(DOLLARS IN MILLIONS) 2022 2021
Segment Adjusted Operating EBITDA:
Nourish $ 981 $ 921
Health & Biosciences 513 469
Scent 328 375
Pharma Solutions 192 131
Total 2,014 1,896
Depreciation & Amortization (897) (861)
Interest Expense (232) (216)
Other Income, net 43 44
Acquisition Related Costs (2) —
Restructuring and Other Charges (5) (34)
Gains on sales of fixed assets 2 1
Impairment of Goodwill (2,250) —
Impairment of Long-Lived Assets (120) —
Shareholder Activism Related Costs (3) (7)
Business Divestiture Costs (91) (21)
Employee Separation Costs (4) (28)
Global Shared Services Implementation Costs (1) —
Frutarom Acquisition Related Costs (1) —
N&B Inventory Step-Up Costs — (363)
N&B Transaction Related Costs — (91)
Integration Related Costs (73) (80)
(Loss) Income Before Taxes $ (1,620) $ 240
Segment Adjusted Operating EBITDA margin:
Nourish 18.7 % 19.9 %
Health & Biosciences 27.9 % 27.9 %
Scent 18.7 % 22.1 %
Pharma Solutions 25.6 % 21.7 %
Consolidated 21.0 % 22.0 %

~~Nourish Segment Adjusted Operating EBITDA~~

Nourish Segment Adjusted Operating EBITDA increased $60 million, or 7% on a reported basis, to $981 million in the first nine months of 2022 (18.7% of segment sales) from $921 million (19.9% of segment sales) in the comparable 2021 period. Nourish Segment Adjusted Operating EBITDA included approximately $65 million attributable to N&B for the month of January in the 2022 period. The decrease in Nourish Segment Adjusted Operating EBITDA, excluding the impact of N&B for the month of January in the 2022 period, was primarily driven by volume decreases, offset in part by favorable net pricing.

~~Health & Biosciences Segment Adjusted Operating EBITDA~~

Health & Biosciences Segment Adjusted Operating EBITDA increased $44 million, or 9% on a reported basis, to $513 million in the first nine months of 2022 (27.9% of segment sales) from $469 million (27.9% of segment sales) in the comparable 2021 period. Health & Biosciences Segment Adjusted Operating EBITDA included approximately $60 million attributable to N&B for the month of January in the 2022 period. The decrease in Health & Biosciences Segment Adjusted Operating EBITDA, excluding the impact of N&B for the month of January in the 2022 period, was primarily due to volume decreases, unfavorable net pricing and the change in business portfolio mix.

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~~Scent Segment Adjusted Operating EBITDA~~

Scent Segment Adjusted Operating EBITDA decreased $47 million, or 13% on a reported basis, to $328 million in the first nine months of 2022 (18.7% of segment sales) from $375 million (22.1% of segment sales) in the comparable 2021 period. On a currency neutral basis, Scent Segment Adjusted Operating EBITDA decreased 5% in 2022 compared to the prior year period. The decrease was primarily driven by unfavorable net pricing and impacts from exchange rate variations, offset in part by volume increases in Fragrance Compounds and ~~Fragrance Ingredients.~~favorable net pricing.

Pharma Solutions Segment Adjusted Operating EBITDA

Pharma Solutions Segment Adjusted Operating EBITDA ~~increased $61~~decreased $6 million, or ~~47%~~9% on a reported basis, to ~~$192~~$59 million in the first ~~nine months~~quarter of ~~2022 (25.6%~~2023 (23.3% of segment sales) from ~~$131~~$65 million ~~(21.7%~~(26.1% of segment sales) in the comparable ~~2021~~2022 period. On a currency neutral basis, Pharma Solutions Segment Adjusted Operating EBITDA ~~included approximately $12 million attributable~~decreased 6% in 2023 compared to ~~N&B for~~ the ~~month of January in the 2022~~prior year period. ~~In addition, the increase in Pharma Solutions Segment Adjusted Operating EBITDA, excluding the impact of N&B for the month of January in the 2022 period,~~The decrease was primarily driven by volume decreases, unfavorable impacts from exchange rate variations and unfavorable manufacturing absorption related to our inventory reduction program, offset in part by favorable net pricing ~~and volume increases.~~in the operating segment.

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Liquidity

Cash and Cash Equivalents

We had cash and cash equivalents of ~~$538~~$594 million, inclusive of $4 million currently in Assets held for sale on the Consolidated Balance Sheets, at ~~September 30, 2022~~March 31, 2023 compared to ~~$711~~$535 million, inclusive of $52 million in Assets held for sale on the Consolidated Balance Sheets, at December 31, ~~2021~~2022 and of this balance, a portion was held outside the United States. Cash balances held in foreign jurisdictions are, in most circumstances, available to be repatriated to the United States.

Effective utilization of the cash generated by our international operations is a critical component of our strategy. We regularly repatriate cash from our non-U.S. subsidiaries to fund financial obligations in the U.S. As we repatriate these funds to the U.S. we will be required to pay income taxes in certain U.S. states and applicable foreign withholding taxes during the period when such repatriation occurs. Accordingly, as of ~~September 30, 2022,~~March 31, 2023, we had a deferred tax liability of approximately ~~$93~~$174 million for the effect of repatriating the funds to the U.S., attributable to various non-U.S. subsidiaries. There is no deferred tax liability associated with non-U.S. subsidiaries where we intend to indefinitely reinvest the earnings to fund local operations and/or capital projects.

Cash Flows Provided By (Used In) Operating Activities

Cash flows provided by operating activities for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 was ~~$189~~$127 million, or ~~2.0%~~4.2% of sales, compared to ~~$1.126 billion,~~cash flows used in operating activities of $4 million, or ~~13.1%~~(0.1)% of sales, for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The ~~decrease~~increase in cash flows from operating activities during ~~2022~~2023 was primarily driven by the ~~increase~~decrease in working capital, largely related to inventories and accounts ~~payable.~~receivable, offset in part by accounts payable and lower cash earnings, excluding the impact of non-cash adjustments.

~~We have various factoring agreements~~Cash Flows Used In Investing Activities

Cash flows used in the U.S. and The Netherlands under which we can factor up to approximately $250 million in receivables. In addition, we have factoring agreements sponsored by certain customers. Under all of the arrangements, we sell the receivables on a non-recourse basis to unrelated financial institutions and account for the transactions as a sale of receivables. The applicable receivables are removed from our Consolidated Balance Sheets when the cash proceeds are received.

~~The impact on cash flows from operating~~investing activities from participating in these programs decreased approximately $24 million and increased approximately $40 million for the nine months ended September 30, 2022 and 2021, respectively. The cost of participating in these programs was approximately $3 million and $2 million for the three months ended ~~September 30, 2022 and 2021, respectively, and~~March 31, 2023 was ~~approximately $6 million and $5 million for the nine months ended September 30, 2022 and 2021, respectively.~~

~~Cash Flows Provided By Investing Activities~~

~~Cash flows provided by investing activities for the nine months ended September 30, 2022 was $887~~$167 million compared to ~~$75~~$121 million in the prior year period. The increase in cash flows ~~from~~used in investing activities was primarily driven by ~~the change in proceeds received from business divestiture and unwinding of derivative instruments, offset in part by the change in cash provided by the Merger with N&B,~~ higher spending on property, plant and ~~equipment and cash paid for acquisitions, net of cash received in the current year period.~~equipment.

We have evaluated and re-prioritized our capital projects and expect that capital spending in ~~2022~~2023 will be approximately ~~5.0%~~4.1% of sales (net of potential grants and other reimbursements from government authorities), ~~up from 3.4%~~ in ~~2021.~~

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line with 4.1% in 2022.

Cash Flows ~~Used In~~Provided By Financing Activities

Cash flows ~~used in~~provided by financing activities for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 was ~~$1.087 billion~~$78 million compared to ~~$1.022 billion~~$95 million in the prior year period. The ~~increase~~decrease in cash ~~used in~~flows from financing activities was primarily driven by higher repayments of short-term debt, offset by an increase in net borrowings of commercial ~~paper, net of borrowings, and higher cash dividend payments, offset in part by less repayments of long-term debt and revolving credit facility and short term borrowings.~~paper.

We paid dividends totaling ~~$604~~$206 million in the ~~2022~~2023 period. We declared a cash dividend per share of $0.81 in the ~~third~~first quarter of ~~2022~~2023 that was paid on ~~October 5, 2022~~April 6, 2023 to all shareholders of record as of ~~September 23, 2022.~~March 24, 2023.

Our capital allocation strategy seeks to maintain our investment grade rating while investing in the business and continuing to pay dividends and repaying debt. The Company does not have any rating downgrade triggers that would accelerate the maturity dates of its senior unsecured debt. However, any downgrade in our credit rating may, depending on the extent of such downgrade, negatively impact our ability to raise additional debt capital, our liquidity and capital position, and may increase our cost of borrowing for new capital raises. In addition, our existing ~~Amended~~ Revolving Credit Facility and Term Loans have pricing grids that are based on credit rating, such that our cost of borrowing may increase as our credit rating decreases. We make capital investments in our businesses to support our operational needs and strategic long-term plans. We are committed to maintaining our history of paying a dividend to investors which is determined by our Board of Directors at its discretion based on various factors.

~~We had a board approved stock repurchase program and as of May 7, 2018, we suspended our share repurchases. As of November 1, 2022, the program has expired.~~

Capital Resources

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

Refer to Note 8 for additional information.

~~Amended~~

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Term Loans and Revolving Credit Facility

The Credit Agreements contain various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers, including the requirement for us to maintain, at the end of each fiscal quarter, a ratio of net debt for borrowed money to credit adjusted EBITDA in respect of the previous 12-month period. On March 23, 2023, we entered into Term Loan Amendment No. 3, Term Loan Amendment No. 4, Revolver Amendment No. 2 and Revolver Amendment No. 3.

Term Loan Amendment No. 3 and Revolver Amendment No. 2, among other things, extend the period during which a Term Loan Covenant Relief Period and Revolver Covenant Relief Period are provided with respect to the financial covenant contained in the Existing Term Loan Credit Agreement and the Existing Revolving Credit Agreement, respectively, through December 31, 2024, or such earlier date on which we elect to terminate such period, by providing that during the Term Loan Covenant Relief Period and the Revolver Covenant Relief Period, our consolidated leverage ratio shall not exceed as of the end of the fiscal quarter for the period of the four fiscal quarters then ended: (i) 5.25x for any fiscal quarter ending on or before June 30, 2023, (ii) 5.00x for the fiscal quarter ending September 30, 2023, (iii) 4.75x for any subsequent fiscal quarter ending on or before March 31, 2024, (iv) 4.50x for the fiscal quarter ending June 30, 2024, (v) 4.25x for the fiscal quarter ending September 30, 2024, (vi) 4.00x for the fiscal quarter ending December 31, 2024. During the Term Loan Covenant Relief Period and the Revolver Covenant Relief Period, Term Loan Amendment No. 3 and Revolver Amendment No. 2 prohibit the Loan Parties from (i) effecting any share repurchases and (ii) creating liens to secure debt in excess of the greater of $400 million and 5.00% of Consolidated Net Tangible Assets, in each case subject to certain exceptions set forth therein.

Additionally, the reference rate for U.S. dollar-denominated loans was updated from LIBOR to Term SOFR. From March 23, 2023, the Term Loans and Revolving Credit Facility now bear interest at a base rate or a rate equal to Term SOFR plus an adjustment of 0.10% per annum or, in the case of euro-denominated loans, the Euro interbank offered rate, plus, in each case, an applicable margin based on our public debt rating. Loans may be prepaid without premium or penalty, subject to customary breakage costs. See Note 8 for additional information on the amendments to the Credit Agreements.

As of ~~September 30, 2022,~~March 31, 2023, we had no outstanding borrowings under our $2.000 billion ~~Amended~~ Revolving Credit Facility.

The amount that we are able to draw down under the ~~Amended~~ Revolving Credit Facility is limited by financial covenants as described in more detail below. As of ~~September 30, 2022,~~March 31, 2023, our draw down capacity was ~~$1.489~~$1.465 billion under the ~~Amended~~ Revolving Credit Facility.

Refer to Note 8 of this Form 10-Q and Part IV, Item 15, “Exhibits and Financial Statement Schedules,” Note 9 of our ~~2021~~2022 Form 10-K, filed on February ~~28, 2022,~~27, 2023 with the SEC, for additional information.

Debt Covenants

At ~~September 30, 2022,~~March 31, 2023, we were in compliance with all financial and other covenants, including the net debt to credit adjusted EBITDA(1) ratio. At ~~September 30, 2022,~~March 31, 2023, our net debt to credit adjusted EBITDA(1) ratio was ~~3.93~~4.62 to 1.0 as defined by the credit facility agreements, which is below the relevant level provided by our financial covenants of existing outstanding debt.

_______________________

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

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(DOLLARS IN MILLIONS)	Twelve Months Ended ~~September 30, 2022~~March 31, 2023
Net loss	$	~~(1,756)~~(2,124)
Interest expense	~~305~~375
Income taxes	~~242~~222
Depreciation and amortization	~~1,192~~1,152
Specified items(1)	~~2,613~~2,648
Non-cash items(2)	1847
Credit Adjusted EBITDA	$	~~2,614~~2,320

_______________________

(1)Specified items for the 12 months ended ~~September 30, 2022~~March 31, 2023 of ~~$2.613~~$2.648 billion consisted of ~~acquisition related costs,~~ restructuring and other charges, impairment of goodwill, impairment of long-lived assets, ~~shareholder activism related costs, business~~acquisition, divestiture ~~costs, employee separation costs, Global Shared Services implementation costs, pension settlement, Frutarom acquisition related costs, N&B inventory step-up costs~~ and integration related ~~costs.~~costs, strategic initiatives costs, regulatory costs and other costs that are not related to recurring operations.

(2)Non-cash items represent all other adjustments to reconcile net (loss) income to net cash provided by operations as presented on the Statements of Cash Flows, including gains on ~~disposal~~sale of fixed assets, ~~gains~~losses on business ~~disposal~~disposals and stock-based compensation.

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(DOLLARS IN MILLIONS)	~~September 30, 2022~~March 31, 2023
Total debt(1)	$	~~10,812~~11,309
Adjustments:
Cash and cash equivalents(2)	~~538~~594
Net debt	$	~~10,274~~10,715

_______________________

(1)Total debt used for the calculation of net debt consists of short-term debt, long-term debt, short-term finance lease obligations and long-term finance lease obligations.

(2)Cash and cash equivalents includes approximately $4 million currently in Assets held for sale on the Consolidated Balance Sheets.

Senior Notes

As of ~~September 30, 2022,~~March 31, 2023, we had ~~$9.216~~$9.360 billion aggregate principal amount outstanding in senior unsecured notes, with ~~$1.266~~$1.410 billion principal amount denominated in EUR and $7.950 billion principal amount denominated in USD, which includes the N&B Senior Notes assumed as a result of the Merger. The notes bear interest ranging from 1.22% per year to 5.12% per year, with maturities from May 1, 2023 to December 1, 2050. See Note 8 for additional information.

Contractual Obligations

We expect to contribute a total of $5 million to our U.S. pension plans and a total of ~~$33~~$32 million to our non-U.S. pension plans during ~~2022.~~2023. During the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, there were no contributions made to the qualified U.S. pension plans, ~~$22~~$6 million of contributions were made to the non-U.S. pension plans, and $3$1 million of benefit payments were made with respect to our non-qualified U.S. pension plan. We also expect to contribute $4$3 million to our postretirement benefits other than pension plans during ~~2022.~~2023. During the ~~nine~~three months ended ~~September 30, 2022, $2~~March 31, 2023, $1 million of contributions were made to postretirement benefits other than pension plans.

As discussed in Note 16 to the Consolidated Financial Statements, at ~~September 30, 2022,~~March 31, 2023, we had entered into various guarantees and had undrawn outstanding letters of credit from financial institutions. These arrangements reflect ongoing business operations, including commercial commitments, and governmental requirements associated with audits or litigation that are in process with various jurisdictions. Based on the current facts and circumstances, these arrangements are not reasonably likely to have a material impact on our consolidated financial condition, results of operations or cash flows.

New Accounting Standards

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

Non-GAAP Financial Measures

We use non-GAAP financial measures in this Form 10-Q, including: (i) currency neutral metrics and (ii) adjusted operating EBITDA and adjusted operating EBITDA margin. We also provide the non-GAAP measure net debt solely for the purpose of providing information on the extent to which the Company is in compliance with debt covenants contained in its debt agreements. Our non-GAAP financial measures are defined below.

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

Adjusted operating EBITDA and adjusted operating EBITDA margin exclude depreciation and amortization expense, interest expense, other (expense) income, net, restructuring and other charges and certain ~~non-recurring~~ items unrelated to recurring operations such as acquisition, ~~related costs, gains on sale of assets, impairment of goodwill, impairment of long-lived assets, shareholder activism related costs, business~~ divestiture ~~costs, employee separation costs, Global Shared Services implementation costs, Frutarom acquisition related costs, N&B inventory step-up costs, N&B transaction related costs~~ and integration related ~~costs.~~costs, strategic initiatives costs, regulatory costs and other costs that are not related to recurring operations.

Net debt to credit adjusted EBITDA is the leverage ratio used in our credit agreement and defined as net debt divided by credit adjusted EBITDA. However, as credit adjusted EBITDA for these purposes was calculated in accordance with the provisions of the credit agreement, it may differ from the calculation used for adjusted operating EBITDA.

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Cautionary Statement Under the Private Securities Litigation Reform Act of 1995

Statements in this Form 10-Q, which are not historical facts or information, are “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management’s current assumptions, estimates and expectations ~~including those~~and include statements concerning (i) ~~the impacts of COVID-19 and our plans to respond to its implications; (ii)~~ the expected impact of global supply chain challenges; ~~(iii)~~(ii) expectations regarding sales and profit for the fiscal year ~~2022,~~2023, including the impact of foreign exchange, pricing actions, raw materials, ~~and~~energy, sourcing, logistics and manufacturing costs; ~~(iv)~~(iii) expectations of the impact of inflationary pressures and the pricing actions to offset exposure to such impacts; ~~(v)~~(iv) the impact of high input costs, including commodities, raw materials, transportation and energy; ~~(vi)~~(v) our ability to drive cost discipline measures and the ability to recover margin to pre-inflation levels; ~~(vii) the divestiture of our Microbial Control business and~~(vi) the progress of our portfolio optimization strategy, through non-core business divestitures and acquisitions, ~~such as~~and expectations regarding the ~~Health Wright acquisition;~~implementation of our refreshed growth-focused strategy; (vii) the ongoing impact of COVID-19 and our plans to respond to its global implications; (viii) ~~our combination with N&B, including the expected benefits and synergies of the N&B Transaction and future opportunities for the combined company; (ix)~~ the success of our integration efforts, following the N&B Transaction, and ability to deliver on our synergy commitments as well as future opportunities for the combined company; (ix) the success of the optimization of our portfolio; (x) the impact of global economic uncertainty and recessionary pressures on demand for consumer products; (xi) the growth potential of the markets in which we operate, including the emerging markets, ~~(xi)~~(xii) expected capital expenditures in ~~2022; (xii)~~2023; (xiii) the expected costs and benefits of our ongoing optimization of our manufacturing operations, including the expected number of closings; ~~(xiii)~~(xiv) expected cash flow and availability of capital resources to fund our operations and meet our debt service requirements; ~~(xiv)~~(xv) our ability to ~~innovate~~enhance our innovation efforts, drive cost efficiencies and execute on specific consumer trends and demands; (xvi) our strategic investments in capacity and ~~(xv)~~increasing inventory to drive improved profitability; and (xvii) our ability to continue to generate value for, and return cash to, our shareholders. These forward-looking statements should be evaluated with consideration given to the many risks and uncertainties inherent in our business that could cause actual results and events to differ materially from those in the forward-looking statements. Certain of such forward-looking information may be identified by such terms as “expect”, “anticipate”, “believe”, “intend”, “outlook”, “may”, “estimate”, “should”, “predict” and similar terms or variations thereof. Such forward-looking statements are based on a series of expectations, assumptions, estimates and projections about the Company, are not guarantees of future results or performance, and involve significant risks, uncertainties and other factors, including assumptions and projections, for all forward periods. Our actual results may differ materially from any future results expressed or implied by such forward-looking statements. Such risks, uncertainties and other factors include, among others, the following:

•inflationary trends, including in the price of our input costs, such as raw materials, transportation and energy;

•supply chain disruptions, geopolitical developments, including the Russia-Ukraine conflict, or climate-change related events (including severe weather events) that may affect our suppliers or procurement of raw materials;

•~~disruption in~~our ability to successfully execute the ~~development, manufacture, distribution or sale~~next phase of our ~~products from COVID-19 and other public health crises;~~strategic transformation;

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

•our substantial amount of indebtedness and its impact on our liquidity, credit ratings and ability to return capital to our shareholders;

•our ability to enter into or close strategic transactions or divestments, or successfully establish and manage acquisitions, collaborations, joint ventures or ~~partnerships, or the failure to close strategic transactions or divestments;~~partnerships;

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

•~~our substantial amount of indebtedness and its impact on our liquidity and ability to return capital to its shareholders;~~

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

•our ability to retain key employees;

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

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

•the impact of global health crises, such as the COVID-19 pandemic, on our supply chains, global operations, our customers and our suppliers;

•disruption in the development, manufacture, distribution or sale of our products from natural disasters (such as the COVID-19 pandemic), public health crises, international conflicts (such as the Russia and Ukraine conflict), terrorist acts, labor strikes, political ~~crisis,~~or economic crises (such as the uncertainty related to protracted U.S. federal debt ceiling negotiations), accidents and similar events;

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

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

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

•our ability to meet increasing customer, consumer, ~~customer,~~ shareholder and regulatory focus on sustainability;

•~~defect,~~defects, quality issues (including product recalls), inadequate disclosure or misuse with respect to the products and capabilities;

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

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

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

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

•the impact of global economic uncertainty (including increased inflation) on demand for consumer products;

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

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

•the impact of ~~the~~our or our counterparties’ failure to comply with ~~U.S. or foreign anti-corruption and anti-bribery laws and regulations, including~~ the U.S. Foreign Corrupt Practices ~~Act;~~Act, similar U.S. or foreign anti-bribery and anti-corruption laws and regulations, applicable sanctions laws and regulations in the jurisdictions in which we operate or ethical business practices and related laws and regulations;

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

•our ability to protect our intellectual property rights;

•the impact of the ~~outcome~~outcomes of legal claims, disputes, regulatory investigations and ~~litigation;~~litigation, related to intellectual property, product liability, competition and anti-trust, environmental matters, indirect taxes or other matters;

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

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

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

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

•the impact of any tax liability resulting from the N&B Transaction; and

•~~risks associated~~our ability to comply with ~~our CEO transition, including~~data protection laws in the ~~impact of employee hiring~~U.S. and ~~retention.~~abroad.

The foregoing list of important factors does not include all such factors, nor necessarily present them in order of importance. In addition, you should consult other disclosures made by the Company (such as in our other filings with the SEC or in company press releases) for other factors that may cause actual results to differ materially from those projected by the Company. Please refer to Part I, Item 1A, “Risk Factors,” of the ~~2021~~2022 Form 10-K for additional information regarding factors that could affect our results of operations, financial condition and liquidity.

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

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

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There are no material changes in market risk from the information provided in our ~~2021~~2022 Form 10-K, except for the cross currency swap agreements.

We use derivative instruments as part of our interest rate risk management strategy. We have entered into certain cross currency swap agreements in order to mitigate a portion of our net European investments from foreign currency risk. As of ~~September 30, 2022,~~March 31, 2023, these swaps were in a net ~~asset~~liability position with an aggregate fair value of ~~$10~~$41 million. Based on a hypothetical decrease or increase of 10% in the value of the U.S. dollar against the Euro, the estimated fair value of our cross currency swaps would change by approximately ~~$131~~$146 million.

ITEM 4. CONTROLS AND PROCEDURES.

(a) Disclosure Controls and Procedures

The Chief Executive Officer and Chief Financial Officer, with the assistance of other members of our management, have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

We have established controls and procedures designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and is accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosure.

(b) Changes in Internal Control over Financial Reporting

The Chief Executive Officer and Chief Financial Officer have also concluded that there have not been any changes in our internal control over financial reporting during the quarter ended ~~September 30, 2022~~March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

For information that updates the disclosures set forth under Part I, Item 3. “Legal Proceedings” in our ~~2021~~2022 Annual Report on Form 10-K (the ~~“2021~~“2022 Form 10-K”), refer to Note 16 to the “Consolidated Financial Statements” in this Form 10-Q.

ITEM 1A. RISK FACTORS.

~~Refer~~For information regarding risk factors, please refer to Part I, Item 1A, “Risk Factors,” of our ~~2021~~2022 Form 10-K, filed on February ~~28, 2022~~27, 2023 with the SEC, as modified by the following revised risk factor, and the information in “Cautionary Statement” included in this Report, and should be read in conjunction with the information contained in this Quarterly Report on Form 10-Q and our other reports and registration statements filed with the SEC. ~~There~~The developments described in the following revised risk factor have ~~been no material changes with respect to~~heightened, or in some cases manifested, certain of the ~~risk factors~~risks disclosed in our ~~2021~~2022 Form 10-K.

Our results of operations may be negatively impacted by the outcome of uncertainties related to legal claims, disputes, investigations and litigation.

From time to time we are involved in a number of legal claims, disputes, regulatory investigations and litigation, including claims, disputes, investigations or litigation related to intellectual property, product liability, competition and antitrust, environmental matters and indirect taxes. For instance, product liability claims may arise due to the fact that we supply products to the food and beverage, functional food, pharma/nutraceutical and personal care industries. Our manufacturing and other facilities may expose us to environmental claims and regulatory investigations and potential fines. In addition, and as further described in our consolidated financial statements, we are subject to antitrust and competition investigations in the United States and Europe as well as class action lawsuits against us and certain of our competitors in the United States and Canada, alleging violations of antitrust laws and related claims. We may face additional civil suits, in the United States or elsewhere, relating to such alleged conduct. At this time we are unable to predict or determine the scope, duration or outcome of these investigations. Our results of operations, liquidity or financial condition could be adversely impacted by unfavorable outcomes in these or other pending or future claims, disputes, investigations or litigation.

In addition, in light of our product offerings into functional food, nutraceuticals, and natural antioxidants, we may also be subject to claims of false or deceptive advertising claims relating to the efficacy, health benefits or other performance attributes of such offerings in the U.S., Europe and other foreign jurisdictions in which we offer these types of products. These claims can arise as a result of function claims, health claims, nutrient content claims and other claims that impermissibly suggest such benefits or attributes for certain foods or food components. The cost of defending these claims or our obligations for direct damages and indemnification if we were found liable could adversely affect our results of operations.

As a result of the N&B Transaction and the Frutarom acquisition, we assumed legal or environmental claims, regulatory investigations, and litigation, including product liability, patent infringement, commercial litigation and other actions. We have and will continue to become involved in additional actions arising from the acquired operations. Specifically, as the N&B Business and Frutarom had a significant number of facilities located globally and a large number of customers, our exposure to legal claims, regulatory and environmental investigations and litigation is increased. This will likely result in an increase in our cost for defense, settlement of claims or indemnification obligations as compared to our historical experience.

Our insurance may not be adequate to protect us from potential material expenses related to pending and future claims and our current levels of insurance may not be available in the future at commercially reasonable prices. Any of these factors could adversely affect our profitability and results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

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ITEM 6. EXHIBITS.


10.1						Cooperation Agreement, dated as of February 1, 2023, by and among International Flavors & Fragrances Inc. and the Icahn Group, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 2, 2023.
10.2						Amendment No. 3 to Term Loan Credit Agreement, dated as of March 23, 2023, among International Flavors & Fragrances Inc., as borrower, the lenders signatory thereto and Morgan Stanley Senior Funding, Inc., as administrative agent, incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on March 27, 2023.
10.3						Amendment No.4 to Term Loan Credit Agreement, dated as of March 23, 2023, among International Flavors & Fragrances Inc., as borrower, the lenders signatory thereto and Morgan Stanley Senior Funding, Inc., as administrative agent, incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on March 27, 2023.
10.4						Amendment No.2 to Third Amended & Restated Revolving Credit Agreement, dated as of March 23, 2023, among International Flavors & Fragrances Inc., International Flavors & Fragrances (Nederland) Holdings B.V. and International Flavors & Fragrances I.F.F. (Nederland) B.V., as borrowers, the lenders signatory thereto and Citibank, N.A., as administrative agent, incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on March 27, 2023.
10.5						Amendment No. 3 to Third Amended & Restated Revolving Credit Agreement, dated as of March 23, 2023, among International Flavors & Fragrances Inc., International Flavors & Fragrances (Nederland) Holdings B.V. and International Flavors & Fragrances I.F.F. (Nederland) B.V., as borrowers, the lenders signatory thereto and Citibank, N.A., as administrative agent, incorporated by reference to Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on March 27, 2023.
10.6						Amended and Restated Executive Severance Policy, as amended and restated on February 1, 2023 (the “Executive Severance Policy”)
31.1						Certification of Frank Clyburn pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2						Certification of Glenn Richter pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32						Certification of Frank Clyburn and Glenn Richter pursuant to 18 U.S.C. Section 1350 as adopted pursuant to the Sarbanes-Oxley Act of 2002.
101.INS						XBRL Instance Document
101.SCH						XBRL Taxonomy Extensions Schema
101.CAL						XBRL Taxonomy Extension Calculation Linkbase
101.DEF						XBRL Taxonomy Extension Definition Linkbase
101.LAB						XBRL Taxonomy Extension Label Linkbase
101.PRE						XBRL Taxonomy Extension Presentation Linkbase
104						Cover Page Interactive File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated:

~~November 7, 2022~~May 10, 2023

By:

/s/ Frank Clyburn

Frank Clyburn

Chief Executive Officer and Director (Principal Executive Officer)

Dated:

~~November 7, 2022~~May 10, 2023

By:

/s/ Glenn Richter

Glenn Richter

Executive Vice President and Chief Financial & Business Transformation Officer (Principal Financial Officer)

Dated:

~~November 7, 2022~~May 10, 2023

By:

/s/ Beril Yildiz

Beril Yildiz

Senior Vice President, Corporate Controller and Chief Accounting Officer (Principal Accounting Officer)

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