Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Jul. 24, 2018 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | INTERNATIONAL FLAVORS & FRAGRANCES INC | |
Entity Central Index Key | 51,253 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 79,047,426 |
Consolidated Balance Sheet
Consolidated Balance Sheet - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash and cash equivalents | $ 322,423 | $ 368,046 |
Trade receivables (net of allowances of $13,622 and $13,392, respectively) | 723,855 | 663,663 |
Inventories: | ||
Raw materials | 353,220 | 326,140 |
Work in process | 23,671 | 16,431 |
Finished goods | 318,301 | 306,877 |
Total Inventories | 695,192 | 649,448 |
Prepaid expenses and other current assets | 285,110 | 215,387 |
Total Current Assets | 2,026,580 | 1,896,544 |
Property, plant and equipment, at cost | 2,098,513 | 2,090,755 |
Accumulated depreciation | (1,230,884) | (1,210,175) |
Total Property Plant and Equipment | 867,629 | 880,580 |
Goodwill | 1,148,586 | 1,156,288 |
Other intangible assets, net | 391,426 | 415,787 |
Deferred income taxes | 82,204 | 99,777 |
Other assets | 157,017 | 149,950 |
Total Assets | 4,673,442 | 4,598,926 |
Current Liabilities: | ||
Short term borrowings | 6,500 | 6,966 |
Accounts payable | 315,656 | 338,188 |
Accrued payroll and bonus | 59,278 | 88,361 |
Dividends payable | 54,488 | 54,420 |
Other current liabilities | 263,448 | 280,833 |
Total Current Liabilities | 699,370 | 768,768 |
Long-term debt | 1,717,189 | 1,632,186 |
Deferred gains | 35,824 | 37,344 |
Retirement liabilities | 226,221 | 228,936 |
Other liabilities | 238,635 | 242,398 |
Total Other Liabilities | 2,217,869 | 2,140,864 |
Commitments and Contingencies | ||
Shareholders' Equity: | ||
Common stock 12 1/2¢ par value; 500,000,000 shares authorized; 115,858,190 shares issued as of June 30, 2018 and December 31, 2017; and 79,046,217 and 78,947,381 shares outstanding as of June 30, 2018 and December 31, 2017, respectively | 14,470 | 14,470 |
Capital in excess of par value | 167,432 | 162,827 |
Retained earnings | 3,992,452 | 3,870,621 |
Accumulated other comprehensive loss | (692,498) | (637,482) |
Treasury stock, at cost (36,811,973 and 36,910,809 shares as of June 30, 2018 and December 31, 2017, respectively) | (1,732,001) | (1,726,234) |
Total Shareholders' Equity | 1,749,855 | 1,684,202 |
Noncontrolling interest | 6,348 | 5,092 |
Total Shareholders' Equity including noncontrolling interest | 1,756,203 | 1,689,294 |
Total Liabilities and Shareholders' Equity | $ 4,673,442 | $ 4,598,926 |
Consolidated Balance Sheet (Par
Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Statement of Financial Position [Abstract] | ||
Trade receivables allowances | $ 13,622 | $ 13,392 |
Common stock, par value, in dollars per share | $ 0.125 | $ 0.125 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 115,858,190 | 115,858,190 |
Common stock, shares outstanding | 79,046,217 | 78,947,381 |
Treasury stock, shares at cost | 36,811,973 | 36,910,809 |
Consolidated Statement Of Incom
Consolidated Statement Of Income and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Statement [Abstract] | ||||
Net sales | $ 920,016 | $ 842,861 | $ 1,850,944 | $ 1,671,154 |
Cost of goods sold | 521,299 | 469,877 | 1,046,419 | 935,088 |
Gross profit | 398,717 | 372,984 | 804,525 | 736,066 |
Research and development expenses | 74,767 | 72,761 | 153,244 | 144,887 |
Selling and administrative expenses | 157,407 | 139,319 | 300,051 | 283,023 |
Amortization of acquisition-related intangibles | 9,584 | 8,494 | 18,769 | 15,561 |
Restructuring and other charges, net | 1,186 | 791 | 1,903 | 10,934 |
Losses (gains) on sales of fixed assets | 1,264 | (68) | 1,195 | (89) |
Operating profit | 154,509 | 151,687 | 329,363 | 281,750 |
Interest expense | 53,246 | 17,556 | 69,841 | 30,363 |
Other (income), net | (20,655) | (7,909) | (21,232) | (29,140) |
Income before taxes | 121,918 | 142,040 | 280,754 | 280,527 |
Taxes on income | 22,769 | 32,245 | 52,190 | 54,968 |
Net income | 99,149 | 109,795 | 228,564 | 225,559 |
Other comprehensive income, after tax: | ||||
Foreign currency translation adjustments | (85,264) | 13,347 | (70,461) | 10,090 |
Gains (losses) on derivatives qualifying as hedges | 10,455 | (11,768) | 9,926 | (13,519) |
Pension and postretirement net liability | 2,890 | 3,688 | 5,519 | 7,323 |
Net current period other comprehensive income (loss) | (71,919) | 5,267 | (55,016) | 3,894 |
Total comprehensive income | $ 27,230 | $ 115,062 | $ 173,548 | $ 229,453 |
Net income per share - basic, in dollars per share | $ 1.25 | $ 1.39 | $ 2.89 | $ 2.85 |
Net income per share - diluted, in dollars per share | $ 1.25 | $ 1.38 | $ 2.87 | $ 2.84 |
Average number of shares outstanding - basic | 79,065 | 79,072 | 79,041 | 79,088 |
Average number of shares outstanding - diluted | 79,303 | 79,305 | 79,347 | 79,360 |
Dividends declared per share, in dollars per share | $ 0.69 | $ 0.64 | $ 1.38 | $ 1.28 |
Consolidated Statement Of Cash
Consolidated Statement Of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 228,564 | $ 225,559 |
Adjustments to reconcile to net cash provided by operating activities: | ||
Depreciation and amortization | 64,968 | 55,805 |
Deferred income taxes | 14,342 | 1,505 |
(Loss) gain on disposal of assets | 1,195 | (89) |
Stock-based compensation | 15,173 | 12,893 |
Pension contributions | (9,963) | (31,557) |
Litigation settlement | 0 | (56,000) |
Product recall claim settlement | (12,969) | 0 |
Foreign currency gain on liquidation of entity | 0 | (12,214) |
Changes in assets and liabilities, net of acquisitions: | ||
Trade receivables | (99,963) | (77,580) |
Inventories | (67,940) | (4,228) |
Accounts payable | (7,139) | (23,479) |
Accruals for incentive compensation | (25,158) | (12,316) |
Other current payables and accrued expenses | 11,028 | (3,099) |
Other assets | (65,620) | 18,007 |
Other liabilities | 8,651 | (35,286) |
Net cash provided by operating activities | 55,169 | 57,921 |
Cash flows from investing activities: | ||
Cash paid for acquisitions, net of cash received | (22) | (191,304) |
Additions to property, plant and equipment | (67,421) | (46,153) |
Proceeds from life insurance contracts | 0 | 1,941 |
Maturity of net investment hedges | (2,642) | 3,016 |
Proceeds from disposal of assets | 618 | 473 |
Net cash used in investing activities | (69,467) | (232,027) |
Cash flows from financing activities: | ||
Cash dividends paid to shareholders | (108,824) | (101,184) |
Increase in revolving credit facility borrowings and overdrafts | 110,259 | 21,595 |
Deferred financing costs | 1,401 | 5,373 |
Proceeds from issuance of long-term debt | 0 | 498,250 |
Loss on pre-issuance hedges | 0 | (5,310) |
Proceeds from issuance of stock under stock plans | 0 | 329 |
Employee withholding taxes paid | (9,096) | (11,485) |
Purchase of treasury stock | (15,475) | (53,211) |
Net cash (used in) provided by financing activities | (24,537) | 343,611 |
Effect of exchange rate changes on cash and cash equivalents | (6,788) | (2,111) |
Net change in cash and cash equivalents | (45,623) | 167,394 |
Cash and cash equivalents at beginning of year | 368,046 | 323,992 |
Cash and cash equivalents at end of period | 322,423 | 491,386 |
Interest paid, net of amounts capitalized | 74,422 | 32,039 |
Income taxes paid | 57,809 | 50,962 |
Accrued capital expenditures | $ 19,160 | $ 13,589 |
Consolidated Financial Statemen
Consolidated Financial Statements | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Consolidated Financial Statements | f Presentation These interim statements and related management’s discussion and analysis should be read in conjunction with the Consolidated Financial Statements and the related notes and management’s discussion and analysis of results of operations, liquidity and capital resources included in our 2017 Annual Report on Form 10-K (“ 2017 Form 10-K”). These interim statements are unaudited. The year-end balance sheet data included in this Form 10-Q was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America. We have historically operated and continue to operate on a 52/53 week fiscal year ending on the Friday closest to the last day of the quarter. For ease of presentation, June 30 and December 31 are used consistently throughout this Form 10-Q and these interim financial statements and related notes to represent the period-end dates. For the 2018 and 2017 quarters, the actual closing dates were June 29 and June 30, respectively. The unaudited interim financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair statement of the results for the periods presented. When used herein, the terms “IFF,” the “Company,” “we,” “us” and “our” mean International Flavors & Fragrances Inc. and its consolidated subsidiaries. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Reclassifications and Revisions Certain prior year amounts have been reclassified and revised to conform to current year presentation. As discussed below and in conformity with the Financial Accounting Standards Board's ("FASB") amendments to the Compensation - Retirement Benefits guidance, the Company has reclassified certain components of net periodic benefit expense (income) to Other income (expense), net. U.S. Tax Reform On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”) that significantly revised the U.S. tax code effective January 1, 2018 by, among other things, lowering the corporate income tax rate from a top marginal rate of 35% to a flat 21%, limiting deductibility of interest expense and performance based incentive compensation, transitioning to a territorial system and creating new taxes associated with global operations. In the fourth quarter of 2017, the Company recorded approximately $139.2 million in charges related to the impact of the Tax Act. Given the significant complexity of the Tax Act, anticipated guidance from the U.S. Treasury about implementing the Tax Act and the potential for additional guidance from the SEC or the FASB, the amount recorded by the Company in the fourth quarter of 2017 was provisional and will continue to be adjusted during 2018. The impact of the Tax Act is expected to be finalized no later than the fourth quarter of 2018. The aforementioned guidance and additional information regarding the Tax Act may also impact the Company's 2018 effective income tax rate, exclusive of any adjustment to the provisional charge. Any material revisions in our computations could adversely affect our cash flows and results of operations. During the six months ended June 30, 2018 , the Company recorded an additional charge of $0.6 million to adjust an accrual related to withholding taxes on planned repatriations. Accounts Receivable The Company sells certain accounts receivable on a non-recourse basis to unrelated financial institutions under “factoring” agreements that are sponsored, solely and individually, by certain customers. The Company accounts for these transactions as sales of receivables, removes the receivables sold from its financial statements, and records cash proceeds when received by the Company. The beneficial impact on cash provided by operations from participating in these programs decreased approximately $25.5 million for the six months ended June 30, 2018 compared to a decrease of approximately $4.7 million for the six months ended June 30, 2017 . The cost of participating in these programs was immaterial to our results in all periods. Recent Accounting Pronouncements In June 2018, the FASB issued Accounting Standards Update ("ASU") 2018-07, "Compensation—Stock Compensation (Topic 718)" intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments. This guidance expands the scope of Topic 718, Compensation-Stock Compensation which currently only includes share-based payments to employees to include share-based payments issued to nonemployees for goods or services. This guidance is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company is currently evaluating the impact this guidance will have on its Consolidated Financial Statements, but does not expect this guidance to have a material impact on its Consolidated Financial Statements. In February 2018, FASB issued ASU 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" which allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act, in addition to requiring certain disclosures about stranded tax effects. This guidance is effective for periods beginning after December 15, 2018, with an election to adopt early. The Company is currently evaluating the impact this guidance may have on its Consolidated Financial Statements. In August 2017, FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities" which eliminates the requirement to separately measure and present hedge ineffectiveness and aligns the presentation of hedge gains and losses with the underlying hedge item. This guidance is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The amended presentation and disclosure requirements are to be applied prospectively while the amendments to cash flow and net investment hedge relationships are to be applied on a modified retrospective basis . The Company is currently evaluating the impact this guidance will have on its Consolidated Financial Statements, but does not expect this guidance to have a material impact on its Consolidated Financial Statements. In May 2017, the FASB issued 2017-09, "Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting" which clarifies changes to the terms or conditions of a share-based payment award that require an entity to apply modification accounting. This guidance is effective for the current year. The Company has determined that this guidance does not have an impact on its Consolidated Financial Statements as it is not the Company's practice to modify the terms or conditions of a share-based payment award after it has been granted. In March 2017, the FASB issued 2017-07, "Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost" which requires employers who present a measure of operating income in their statement of income to include only the service cost component of net periodic pension cost and postretirement costs in operating expenses. This guidance is effective, and as required, has been applied on a full retrospective basis. The impact of the adoption of this standard on January 1, 2018 was a decrease in operating profit by approximately $7.4 million in the three months ended June 30, 2017 and by approximately $14.9 million in the six months ended June 30, 2017 , and a corresponding increase in Other (income) expense, net as presented in the Company's Consolidated Statement of Income and Comprehensive Income. There was no impact to Net income or Net Income per share in either period. See Note 10 of the Consolidated Financial Statements for further details. The new guidance also limits the amount of net periodic benefit cost eligible for capitalization to assets. The new guidance permits only the service cost component of net periodic benefit cost to be eligible for capitalization. The Company applied the practical expedient that permits the use of amounts previously disclosed as the basis for retrospective application and, as provided under the practical expedient, has not presented the income statement impact based on the capitalization of the applicable costs. In August 2016, the FASB issued 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" which requires changes to the classification of certain activities within the statement of cash flows. This guidance is effective for the current year, and the Company has determined that this adoption does not have an impact on its Consolidated Statement of Cash Flows. In June 2016, the FASB issued 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" which requires issuers to measure expected credit losses for financial assets based on historical experience, current conditions and reasonable and supportable forecasts. As such, an entity will use forward-looking information to estimate credit losses. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements, but does not expect this guidance to have a material impact on its Consolidated Financial Statements. In February 2016, the FASB issued 2016-02, "Leases (Topic 842)", with subsequent amendments, which requires changes to the accounting for leases. The new guidance establishes a new lease accounting model that requires entities to record assets and liabilities related to leases on the balance sheet for certain types of leases. The guidance will be effective for annual and interim periods beginning after December 15, 2018. The Company expects to adopt this guidance effective December 29, 2018, the first day of the Company’s 2019 fiscal year, and that the adoption of this guidance will result in significant increases to assets and liabilities on its Consolidated Balance Sheet. The Company is still evaluating the impact of this guidance on its Consolidated Statement of Income and Comprehensive Income and Consolidated Statement of Cash Flows. The Company has begun to evaluate the nature of its leases and has compiled a preliminary analysis of the type and location of its leases. The Company expects that the significant portion of its lease liabilities and right of use assets will relate to property, with additional lease and corresponding right of use assets in existence that relate to vehicles and machinery. Adoption of ASC Topic 606, Revenue from Contracts with Customers In May 2014, the FASB issued 2014-09, "Revenue from Contracts with Customers", with subsequent amendments, that provides for a comprehensive model to be used in accounting for revenue arising from contracts with customers (ASC Topic 606, Revenue from Contracts with Customers) (the “Revenue Standard”). Under the Revenue Standard, revenue is recognized to reflect the transfer of goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Companies have the option to apply the new guidance under a retrospective approach to each prior reporting period presented or a modified retrospective approach with the cumulative effect of initially applying the new guidance recognized at the date of initial application within the Consolidated Balance Sheet. The new Revenue Standard became effective for annual reporting periods beginning after December 15, 2017, and the Company has adopted the new revenue standard using the modified retrospective approach on December 30, 2017, the first day of the Company’s 2018 fiscal year. The Company creates and manufactures flavors and fragrances. Approximately 90% of its products, principally Flavors compounds and Fragrances compounds, are customized to customer specifications and have no alternative use other than the sale to the specific customer (“Compounds products”). The remaining revenue is derived largely from Fragrance Ingredients products that, generally, are commodity products with alternative uses and not customized (“Ingredients products”). With respect to the vast majority of the Company’s contracts for Compounds products, the Company currently recognizes revenue on the transfer of control of the product at a point in time as the Company does not have an “enforceable right to payment for performance to date” (as set out in the Revenue Standard). 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. With respect to the Company’s contracts related to Ingredients products, the Company currently recognizes revenue on the transfer of control of the product at a point in time as such products generally have alternative uses and the Company does not have an “enforceable right to payment for performance to date.” As the Company adopted the Revenue Standard using the modified retrospective method effective the first day of its 2018 fiscal year, results for its 2018 fiscal year are presented under the Revenue Standard while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605, which required that revenue was accounted for when the earnings process was complete. The Company recorded a net increase to retained earnings of $2.1 million as of the first day of its 2018 fiscal year due to the cumulative impact of adopting the Revenue Standard. In connection with the adjustment to retained earnings, the Company also recorded an increase of $4.4 million in contract assets (which are included in Prepaid expenses and other assets), a decrease of $1.7 million in inventory, and an increase in taxes payable of $0.6 million . The impact to revenues, gross profit and net income for the three months ended June 30, 2018 were reductions of $1.9 million , $1.2 million and $0.9 million , respectively, and for the six months ended June 30, 2018 were reductions of $2.5 million , $1.6 million and $1.2 million , respectively, as a result of applying the Revenue Standard as compared to the amounts that would have been recognized under ASC Topic 605. Revenue Recognition The Company recognizes revenue when control of the promised goods is transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods. Sales, value add, and other taxes the Company collects are excluded from revenues. The Company receives payment in accordance with standard customer terms. The following table presents the Company's revenues disaggregated by business unit: Three Months Ended June 30, Six Months Ended June 30, (DOLLARS IN THOUSANDS) 2018 2017 (a) 2018 2017 (a) Flavor Compounds $ 450,540 $ 414,323 $ 899,559 $ 820,487 Fragrance Compounds Consumer Fragrances 274,586 253,258 554,849 505,891 Fine Fragrances 97,448 91,432 195,817 179,199 Fragrance Ingredients 97,442 83,848 200,719 165,577 Total revenues $ 920,016 $ 842,861 $ 1,850,944 $ 1,671,154 _______________________ (a) Prior period amounts have not been adjusted based on the modified retrospective method. The following table presents our revenues disaggregated by region, based on the region of our customers: Three Months Ended June 30, Six Months Ended June 30, (DOLLARS IN THOUSANDS) 2018 2017 (a) 2018 2017 (a) Europe, Africa and Middle East $ 292,848 $ 259,292 $ 602,161 $ 516,976 Greater Asia 242,221 224,703 485,779 447,523 North America 249,054 230,529 490,199 449,357 Latin America 135,893 128,337 272,805 257,298 Total revenues $ 920,016 $ 842,861 $ 1,850,944 $ 1,671,154 _______________________ (a) Prior period amounts have not been adjusted based on the modified retrospective method. Flavors and Fragrances Compounds Revenues The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties and payment terms (which vary by customer) are identified, the contract has commercial substance, and collectability of consideration is probable. Consistent with our past practice, the amount of revenue recognized is adjusted at the time of sale for expected discounts and rebates (“Variable Consideration”). The Company generates revenues primarily by manufacturing customized Flavor compounds and Fragrance compounds for the exclusive use of our customers. The Company combines the shipment of goods with their manufacture to account for both shipment and manufacture as the sole performance obligation. With respect to the vast majority of the Company’s contracts for Compounds products , the Company recognizes a sale at the point in time when it ships the product from its manufacturing facility to its customer, as this is the time when control of the goods has transferred to the customer. The amount of consideration received and revenue recognized is impacted by the Variable Consideration the Company has agreed with its customers. The Company estimates Variable Consideration amounts for each customer based on the specific agreement, an analysis of historical volumes and the current activity with that customer. The Company reassesses its estimates of Variable Consideration at each reporting date throughout the contract period and updates the estimate until the uncertainty is resolved. During the current period, changes to estimates of Variable Consideration have been immaterial. With respect to a small number of contracts for the sale of Compounds products, the Company recognizes revenue over time as it manufactures customized compounds that do not have an alternative use and for which the contracts provide the Company with an enforceable right to payment, including a reasonable profit, at all times during the contract term commencing with the manufacturing of the goods. When revenue is recognized over time, the amount of revenue recognized is based on the extent of progress towards completion of the promised goods. The Company generally uses the output method to measure progress for its contracts as this method reflects the transfer of goods to the customer. Once customization begins, the manufacturing process is generally completed within a two week period. Due to the short time frame for production, there is little estimation uncertainty in the process. In addition, due to the customized nature of our products, our returns are not material. Fragrance Ingredients Revenues The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties and payment terms (which vary by customer) are identified, the contract has commercial substance, and collectability of consideration is probable. The Company generates revenues primarily by manufacturing Ingredients products for the use of our customers. The Company combines the shipment of goods with their manufacture to account for both shipment and manufacture as the sole performance obligation. Generally, the Company recognizes a sale at the time when it ships the product from their manufacturing facility to their customer, as this is the point when control of the goods or services has transferred to the customer. The amount of consideration received and revenue recognized is impacted by discounts offered to its customers. The Company estimates discounts based on an analysis of historical experience and current activity. The Company assesses its estimates of discounts at each reporting date throughout the contract period and updates its estimates until the uncertainty has been resolved. During the current period, changes to estimates of discounts have been immaterial. Contract Asset and Accounts Receivable The following table reflects the balances in our contract assets and accounts receivable for the six months ended June 30, 2018 and December 31, 2017 : (DOLLARS IN THOUSANDS) June 30, 2018 At adoption Receivables (included in Trade receivables) $ 737,477 $ 677,055 Contract asset - Short term 1,903 4,449 |
Net Income Per Share
Net Income Per Share | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | NET INCOME PER SHARE Net income per share is based on the weighted average number of shares outstanding. A reconciliation of the shares used in the computation of basic and diluted net income per share is as follows: Three Months Ended June 30, Six Months Ended June 30, (SHARES IN THOUSANDS) 2018 2017 2018 2017 Basic 79,065 79,072 79,041 79,088 Assumed dilution under stock plans 238 233 306 272 Diluted 79,303 79,305 79,347 79,360 There were no stock options or stock-settled appreciation rights (“SSARs”) excluded from the computation of diluted net income per share for the three and six months ended June 30, 2018 and 2017 . The Company has issued shares of purchased restricted common stock and purchased restricted common stock units (collectively “PRSUs”) which contain rights to nonforfeitable dividends while these shares are outstanding and thus are considered participating securities. Such securities are required to be included in the computation of basic and diluted earnings per share pursuant to the two-class method. The Company did not present the two-class method since the difference between basic and diluted net income per share for both unrestricted common shareholders and PRSU shareholders was less than $0.01 per share for each period presented, and the number of PRSUs outstanding as of June 30, 2018 and 2017 was immaterial. Net income allocated to such PRSUs was $0.2 million for each of the three months ended June 30, 2018 and 2017 , respectively, and $0.5 million during each of the six months ended June 30, 2018 and 2017 . |
Acquisitions
Acquisitions | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Acquisitions | Pure On April 7, 2017, the Company completed the acquisition of 100% of the outstanding shares of Columbia PhytoTechnology, LLC d/b/a PowderPure ("PowderPure"), a privately-held flavors company with facilities in North America. The acquisition was accounted for under the purchase method. PowderPure was acquired to expand expertise in, and product offerings of, clean label solutions within the Flavors business. The Company paid approximately $54.6 million , including $0.4 million of cash acquired for this acquisition, which was funded from existing resources. Additionally, the Company recorded an accrual of approximately $1.4 million representing the estimate at acquisition of additional contingent consideration payable to the former owners of PowderPure (the maximum earnout payable is $10 million upon satisfaction of certain performance metrics). The purchase price exceeded the preliminary fair value of existing net assets by approximately $48.0 million . The excess was allocated principally to identifiable intangible assets including approximately $27.5 million to proprietary technology, approximately $4.5 million to trade name, approximately $0.8 million to customer relationships, and approximately $15.2 million of goodwill which is deductible for tax purposes. Goodwill is the excess of the purchase price over the fair value of net assets acquired and represents the value the Company expects to achieve from its increased exposure to clean label products within the existing Flavors business. The intangible assets are being amortized over the following estimated useful lives: proprietary technology, 14 years; trade name, 14 years; and customer relationships, 2 years. The purchase price allocation was completed in the first quarter of 2018. No material adjustments have been made to the purchase price allocation since the preliminary valuation performed in the second quarter of 2017. The estimated amount of the contingent consideration payable was adjusted during the first quarter of 2018 and resulted in a decrease in administrative expense of approximately $0.6 million . No pro forma financial information for 2017 is presented as the acquisition was not material to the consolidated financial statements. Fragrance Resources On January 17, 2017, the Company completed the acquisition of 100% of the outstanding shares of Fragrance Resources, Inc., Fragrance Resources GmbH, and Fragrance Resources SAS (collectively "Fragrance Resources"), a privately-held fragrance company with facilities in Germany, North America, France, and China. The acquisition was accounted for under the purchase method. Fragrance Resources was acquired to strengthen the North American and German Fragrances business. The Company paid approximately € 143.4 million (approximately $151.9 million ) including approximately € 13.7 million (approximately $14.4 million ) of cash acquired for this acquisition, which was funded from existing resources including use of its revolving credit facility. Of the total paid, approximately € 142.0 million (approximately $150.5 million ) was paid at closing and an additional € 1.4 million (approximately $1.5 million ) was paid in connection with the finalization of the working capital adjustment. The purchase price exceeded the fair value of existing net assets by approximately $122.0 million . The excess was allocated principally to identifiable intangible assets including approximately $51.7 million related to customer relationships, approximately $13.6 million related to proprietary technology and trade name, and approximately $ 72.0 million of goodwill (which is not deductible for tax purposes) and approximately $15.3 million of net deferred tax liability. Goodwill is the excess of the purchase price over the fair value of net assets acquired and represents synergies from the addition of Fragrance Resources to the Company's existing Fragrances business. The intangible assets are being amortized over the following estimated useful lives: trade name, 2 years; proprietary technology, 5 years; and customer relationships, 12 - 16 years. The purchase price allocation was finalized in the fourth quarter of 2017. Certain measurement period adjustments were made subsequent to the initial purchase price allocation including adjustments related to the finalization of the purchase price, the allocation of certain intangibles and the calculation of applicable deferred taxes. The additional amortization of intangibles required as a result of the measurement period adjustments was not material. No pro forma financial information for 2016 is presented as the acquisition was not material to the consolidated financial statements. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets, Net Goodwill and Other Intangible Assets, Net (Notes) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets, Net | GOODWILL AND OTHER INTANGIBLE ASSETS, NET Goodwill Movements in goodwill during 2018 were as follows: (DOLLARS IN THOUSANDS) Goodwill Balance at December 31, 2017 $ 1,156,288 Acquisitions 22 Foreign exchange (7,724 ) Balance at June 30, 2018 $ 1,148,586 Other Intangible Assets Other intangible assets, net consisted of the following amounts: June 30, December 31, (DOLLARS IN THOUSANDS) 2018 2017 Asset Type Customer relationships $ 402,032 $ 407,636 Trade names & patents 38,146 38,771 Technological know-how 161,331 161,856 Other 24,734 24,814 Total carrying value 626,243 633,077 Accumulated Amortization Customer relationships (116,519 ) (104,800 ) Trade names & patents (16,998 ) (15,241 ) Technological know-how (81,580 ) (76,766 ) Other (19,720 ) (20,483 ) Total accumulated amortization (234,817 ) (217,290 ) Other intangible assets, net $ 391,426 $ 415,787 Amortization Amortization expense was $9,584 and $8,494 for the three months ended June 30, 2018 and 2017 , respectively and $18,769 and $15,561 for the six months ended June 30, 2018 and 2017 , respectively. Annual amortization is expected to be $36.0 million for the full year 2018 , $34.6 million for the year 2019 , $33.9 million for the year 2020 , $29.0 million for the year 2021 , $25.0 million for the year 2022 and $24.9 million for the year 2023 . |
Restructuring and Other Charges
Restructuring and Other Charges, Net | 6 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other Charges, Net | RESTRUCTURING AND OTHER CHARGES, NET Restructuring and other charges primarily consist of separation costs for employees including severance, outplacement and other benefit costs. 2017 Productivity Program On February 15, 2017, the Company announced that it was adopting a multi-year productivity program designed to improve overall financial performance, provide flexibility to invest in growth opportunities and drive long-term value creation. In connection with this program, the Company expects to optimize its global footprint and simplify its organizational structures globally. In connection with this initiative, the Company expects to incur cumulative, pre-tax cash charges of between $30 - $35 million , consisting primarily of $24 - $26 million in personnel-related costs and an estimated $6 million in facility-related costs, such as lease termination, and integration-related costs. The Company recorded $22.5 million of charges related to personnel costs and lease termination costs through the second quarter of 2018 , with the remainder of the personnel related and other costs expected to be recognized by the end of 2018. The Company recorded $1.2 million and $3.1 million of charges related to personnel costs and lease termination costs during the three months ended June 30, 2018 and 2017 , respectively, and $1.9 million and $13.2 million of charges related to personnel costs and lease termination costs during the six months ended June 30, 2018 and 2017 , respectively. The Company made payments of $4.5 million related to severance in 2018 . The overall charges were split approximately evenly between Flavors and Fragrances. This initiative is expected to result in the reduction of approximately 370 members of the Company’s global workforce, including acquired entities, in various parts of the organization. Changes in restructuring liabilities during the six months ended June 30, 2018 , were as follows: (DOLLARS IN THOUSANDS) Employee-Related Costs Other Total Balance at December 31, 2017 $ 7,539 $ 418 $ 7,957 Additional charges (reversals), net 1,903 — 1,903 Payments (4,581 ) — (4,581 ) Balance at June 30, 2018 $ 4,861 $ 418 $ 5,279 |
Borrowings
Borrowings | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Borrowings | Debt consists of the following: (DOLLARS IN THOUSANDS) Effective Interest Rate June 30, 2018 December 31, 2017 Senior notes - 2007 (1)(4) 6.40% - 6.82% $ 249,776 $ 249,765 Senior notes - 2013 (1) 3.39 % 298,823 298,670 Euro Senior notes - 2016 (1) 1.99 % 573,514 589,848 Senior notes - 2017 (1) 4.50 % 492,941 492,819 Credit facility LIBOR + 1.125% (2) 103,988 — Bank overdrafts and other 4,590 7,993 Deferred realized gains on interest rate swaps 57 57 1,723,689 1,639,152 Less: Short term borrowings (3) (6,500 ) (6,966 ) $ 1,717,189 $ 1,632,186 _______________________ (1) Amount is net of unamortized discount and debt issuance costs. (2) Represents the rate on drawn down and outstanding balances. Deferred debt issuance costs are immaterial. (3) Includes bank borrowings, commercial paper, overdrafts and current portion of long-term debt. (4) As discussed in Note 3 above, in connection with the pending acquisition of Frutarom and associated financing, the Company also expects to pay its outstanding $250 million of its Senior Notes 2007 and the associated make-whole payments of approximately $35 million . The amount outstanding continues to be reflected as long term given that the Company has not entered into a contractual commitment to repay. Commercial Paper Commercial paper issued by the Company generally has terms of 90 days or less. As of June 30, 2018 and December 31, 2017 , there was no commercial paper outstanding. The revolving credit facility is used as a backstop for the Company's commercial paper program. The maximum amount of commercial paper outstanding for the six months ended June 30, 2018 and 2017 was $85 million and $ 50 million , respectively. Financing of the Pending Acquisition of Frutarom Bridge Loan Facility In connection with entering into the merger agreement with Frutarom, the Company entered into a debt commitment letter for up to a $5.45 billion 364-day unsecured bridge loan facility to the extent the Company has not received $5.45 billion of net cash proceeds (and/or qualified bank commitments) from a combination of (a) the issuance by the Company of a combination of equity securities, equity-linked securities and/or unsecured debt securities and/or (b) unsecured term loans, in each case, at or prior to completion of the acquisition. The bridge loan commitment will be reduced to the extent that the Company obtains certain other debt financing and completes certain equity issuances. On May 21, 2018, the Company, Morgan Stanley Senior Funding, Inc. and certain other financial institutions entered into a bridge joinder agreement to the commitment letter to provide for additional bridge commitment parties. In connection with the bridge loan commitment, the Company incurred $37.0 million of fees which are being amortized over the commitment period and are included in Interest expense in Consolidated Statement of Comprehensive Income. Term Facility On June 6, 2018, the Company entered into a term loan credit agreement to replace a portion of the bridge loan facility, reducing the amount of the bridge loan commitments by $350 million . Under the term loan credit agreement, the lenders thereunder have committed to provide, subject to certain conditions, a senior unsecured term loan facility (as amended, "Term Facility") in an original aggregate principal amount of up to $350.0 million , maturing three years after the funding date thereunder. The debt is expected to be issued in the fourth quarter of 2018. The Term Facility will bear interest, at the Company’s option, at a per annum rate equal to either (x) an adjusted LIBOR rate plus an applicable margin varying from 0.75% to 2.00% or (y) a base rate plus an applicable margin varying from 0.00% to 1.00% , in each case depending on the public debt ratings for non-credit enhanced long-term senior unsecured debt issued by the Company. Loans under the Term Facility will amortize quarterly at a per annum rate of 10.0% of the aggregate principal amount of the loans made under the Term Facility on the funding date, commencing at the end of the first full fiscal quarter after funding, with the balance payable on the third anniversary of the funding date. The Company may voluntarily prepay the term loans without premium or penalty. The term loan credit agreement contains various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers, including a maximum ratio of net debt to EBITDA of 4.50 x with step-downs over time and a temporary step-up to 6.0 x for the first full fiscal quarter after funding if the Company has not issued equity or mandatory convertible securities generating gross proceeds of at least $1.75 billion on or before the closing date of the acquisition. Amended Credit Facility On May 21, 2018 and June 6, 2018, the Company and certain of its subsidiaries amended and restated the Company’s existing amended and restated credit agreement with Citibank, N.A., as administrative agent, last amended and restated on December 2, 2016 (as amended, the “Amended Credit Facility”) in connection with the pending acquisition of Frutarom, to, among other things (i) extend the maturity date of the Amended Credit Facility until December 2, 2023, (ii) increase the maximum ratio of net debt to EBITDA on and after the closing date of the acquisition and (iii) increase the drawn down capacity to $1.0 billion , consisting of a $585 million tranche A revolving credit facility (which provides for borrowings available in U.S. dollars, euros, Swiss francs, Japanese yen and/or British pounds sterling, with a sublimit of $25 million for swing line borrowings) (“Tranche A”) and a $415 million tranche B revolving credit facility (which provides for borrowings available in U.S. dollars, euros, Swiss francs, Japanese yen and/or British pounds sterling, with sublimits of €50 million and $25 million for swing line borrowings) (“Tranche B” and, together with Tranche A, the “Revolving Facility”). The interest rate on the Revolving Facility will be, at the applicable borrower’s option, a per annum rate equal to either (x) an adjusted LIBOR rate plus an applicable margin varying from 0.75% to 1.75% or (y) a base rate plus an applicable margin varying from 0.00% to 0.750% , in each case depending on the public debt ratings for non-credit enhanced long-term senior unsecured debt issued by the Company. Other terms and covenants under the Amended Credit Facility remain substantially unchanged. In connection with the Amended Credit Facility, the Company incurred $0.7 million of debt issuance costs. As of June 30, 2018 , total availability under the Amended Credit Facility was $1.6 billion , with no outstanding borrowings. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | U.S. Tax Reform In the fourth quarter of 2017, the Company recorded approximately $139.2 million in charges related to the impact of the Tax Act. Given the significant complexity of the Tax Act, anticipated guidance from the U.S. Treasury about implementing the Tax Act and the potential for additional guidance from the SEC or the FASB, the amount recorded by the Company in the fourth quarter of 2017 was provisional and will continue to be adjusted during 2018. The impact of the Tax Act is expected to be finalized no later than the fourth quarter of 2018. The aforementioned guidance and additional information regarding the Tax Act may also impact the Company's 2018 effective income tax rate, exclusive of any adjustment to the provisional charge. Any material revisions in our computations could adversely affect our cash flows and results of operations. During the first quarter of 2018, the Company recorded an additional charge of $0.6 million to adjust an accrual related to withholding taxes on planned repatriations. Uncertain Tax Positions At June 30, 2018 , the Company had $30.6 million of unrecognized tax benefits recorded in Other liabilities and $1.2 million in Other current liabilities. If these unrecognized tax benefits were recognized, the effective tax rate would be affected. At June 30, 2018 , the Company had accrued interest and penalties of $2.5 million classified in Other liabilities and $0.1 million in Other current liabilities. As of June 30, 2018 , the Company’s aggregate provisions for uncertain tax positions, including interest and penalties, was $34.4 million associated with various tax positions asserted in various jurisdictions, none of which is individually material. The Company regularly repatriates a portion of current year earnings from select non–U.S. subsidiaries. No provision is made for additional withholding taxes on undistributed earnings of subsidiary companies that are intended and planned to be indefinitely invested in such subsidiaries. We intend to, and have plans to, reinvest these earnings indefinitely in our foreign subsidiaries to fund local operations and/or capital projects. 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 2008 to 2017 . Based on currently available information, we do not believe the ultimate outcome of any of these tax audits and other tax positions related to open tax years, when finalized, will have a material impact on our financial position. 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 13. Effective Tax Rate The effective tax rate for the three months ended June 30, 2018 was 18.7% compared with 22.7% for the three months ended June 30, 2017 . The quarter-over-quarter decrease was largely due to a more favorable mix of earnings, a lower cost of repatriation and the re-measurement of loss provisions, partially offset by the impact from U.S. tax reform and other items (including the impact of current year transactions costs and certain non-taxable gains on foreign currency in prior year). The effective tax rate for the six months ended June 30, 2018 was 18.6% compared with 19.6% for the six months ended June 30, 2017 . The year-over-year decrease was largely due to a more favorable mix of earnings, a lower cost of repatriation, the re-measurement of loss provisions and the release of a State valuation allowance related to prior years, partially offset by the impact of U.S. tax reform and other items (including the impact of current year transaction costs and certain non-taxable gains on foreign currency in prior year). |
Stock Compensation Plans
Stock Compensation Plans | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Compensation Plans | STOCK COMPENSATION PLANS The Company has various plans under which its officers, senior management, other key employees and directors may be granted equity-based awards. Equity awards outstanding under the plans include PRSUs, restricted stock units (RSUs), SSARs and Long-Term Incentive Plan awards. Liability-based awards outstanding under the plans are cash-settled RSUs. Stock-based compensation expense and related tax benefits were as follows: Three Months Ended June 30, Six Months Ended June 30, (DOLLARS IN THOUSANDS) 2018 2017 2018 2017 Equity-based awards $ 7,554 $ 7,074 $ 15,173 $ 12,893 Liability-based awards 242 1,298 396 3,051 Total stock-based compensation expense 7,796 8,372 15,569 15,944 Less: Tax benefit (1,335 ) (2,336 ) (2,897 ) (4,549 ) Total stock-based compensation expense, after tax $ 6,461 $ 6,036 $ 12,672 $ 11,395 |
Segment Information
Segment Information | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Segment Information | SEGMENT INFORMATION The Company is organized into two operating segments: Flavors and Fragrances. These segments align with the internal structure of the Company used to manage these businesses. Performance of these operating segments is evaluated based on segment profit which is defined as operating profit before Restructuring and other charges, net; Global expenses and certain non-recurring items; Interest expense; Other income (expense), net; and Taxes on income. The Global expenses caption below represents corporate and headquarters-related expenses which include legal, finance, human resources, certain incentive compensation expenses and other R&D and administrative expenses that are not allocated to individual operating segments. Reportable segment information is as follows: Three Months Ended June 30, Six Months Ended June 30, (DOLLARS IN THOUSANDS) 2018 2017 2018 2017 Net sales: Flavors $ 450,540 $ 414,323 $ 899,559 $ 820,487 Fragrances 469,476 428,538 951,385 850,667 Consolidated $ 920,016 $ 842,861 $ 1,850,944 $ 1,671,154 Segment profit: Flavors $ 109,605 $ 96,840 $ 221,169 $ 191,395 Fragrances 80,780 80,993 174,056 158,867 Global expenses (20,572 ) (13,488 ) (44,398 ) (29,781 ) Operational Improvement Initiatives (a) (403 ) (445 ) (1,429 ) (1,066 ) Acquisition Related Costs (b) 4 (6,278 ) 518 (15,066 ) Integration Related Costs (c) (993 ) (731 ) (993 ) (1,923 ) Legal Charges/Credits, net (d) — (1,000 ) — (1,000 ) Tax Assessment (e) — 19 — (5,331 ) Restructuring and Other Charges, net (f) (193 ) (791 ) (910 ) (10,934 ) (Losses) Gains on Sale of Assets (1,264 ) 68 (1,195 ) 89 FDA Mandated Product Recall (g) — (3,500 ) (5,000 ) (3,500 ) Frutarom Acquisition Related Costs (h) (12,455 ) — (12,455 ) — Operating profit 154,509 151,687 329,363 281,750 Interest expense (53,246 ) (17,556 ) (69,841 ) (30,363 ) Other income (expense) 20,655 7,909 21,232 29,140 Income before taxes $ 121,918 $ 142,040 $ 280,754 $ 280,527 (a) For 2018, represents accelerated depreciation related to a plant relocation in India. For 2017, represents accelerated depreciation and idle labor costs in Hangzhou, China. (b) For 2018, represents adjustments to the contingent consideration payable for PowderPure, and transaction costs related to Fragrance Resources and PowderPure within Selling and administrative expenses. For 2017, represents the amortization of inventory "step-up" related to the acquisitions of David Michael, Fragrance Resources and PowderPure, included in cost of goods sold and transaction costs related to the acquisitions of David Michael, Fragrance Resources and PowderPure, included in Selling and administrative expenses. (c) For 2018, represents costs related to the integration of David Michael. For 2017, represents costs related to the integration of David Michael and Fragrance Resources acquisitions. (d) Represents additional charge related to litigation settlement. (e) Represents the reserve for payment of a tax assessment related to commercial rent for prior periods. (f) Represents severance costs related to the 2017 Productivity Program and Taiwan lab closure. (g) Represents management's best estimate of losses related to the previously disclosed FDA mandated recall. (h) Represents transaction-related costs and expenses related to the pending acquisition of Frutarom. Net sales are attributed to individual regions based upon the destination of product delivery are as follows: Three Months Ended June 30, Six Months Ended June 30, (DOLLARS IN THOUSANDS) 2018 2017 2018 2017 Net sales related to the U.S. $ 234,118 $ 243,815 $ 464,521 $ 449,325 Net sales attributed to all foreign countries 685,898 599,046 1,386,423 1,221,829 No country other than the U.S. had net sales in any period presented greater than 6% of total consolidated net sales. |
Employee Benefits
Employee Benefits | 6 Months Ended |
Jun. 30, 2018 | |
Retirement Benefits [Abstract] | |
Employee Benefits | EMPLOYEE BENEFITS Pension and other defined contribution retirement plan expenses included the following components: (DOLLARS IN THOUSANDS) U.S. Plans Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Service cost for benefits earned (1) $ 596 $ 698 $ 1,192 $ 1,395 Interest cost on projected benefit obligation (2) 4,790 4,561 9,580 9,122 Expected return on plan assets (2) (7,740 ) (9,246 ) (15,479 ) (18,492 ) Net amortization and deferrals (2) 1,549 1,793 3,098 3,585 Net periodic benefit income (805 ) (2,194 ) (1,609 ) (4,390 ) Defined contribution and other retirement plans (1) 3,081 2,524 5,771 4,779 Total expense $ 2,276 $ 330 $ 4,162 $ 389 (DOLLARS IN THOUSANDS) Non-U.S. Plans Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Service cost for benefits earned (1) $ 4,470 $ 5,610 $ 8,939 $ 11,220 Interest cost on projected benefit obligation (2) 4,338 3,911 8,675 7,822 Expected return on plan assets (2) (12,032 ) (12,334 ) (24,064 ) (24,668 ) Net amortization and deferrals (2) 2,972 3,988 5,943 7,977 Net periodic benefit (income) cost (252 ) 1,175 (507 ) 2,351 Defined contribution and other retirement plans (1) 1,706 1,616 3,258 2,913 Total expense $ 1,454 $ 2,791 $ 2,751 $ 5,264 _______________________ (1) Included as a component of Operating Profit . (2) Included as a component of Other Income (Expense), net. The Company expects to contribute a total of approximately $4.1 million to its U.S. pension plans and a total of $17.1 million to its Non-U.S. Plans during 2018 . During the six months ended June 30, 2018 , no contributions were made to the qualified U.S. pension plans, $7.8 million of contributions were made to the non-U.S. pension plans, and $2.2 million of benefit payments were made with respect to the Company's non-qualified U.S. pension plan. Expense recognized for postretirement benefits other than pensions included the following components: Three Months Ended June 30, Six Months Ended June 30, (DOLLARS IN THOUSANDS) 2018 2017 2018 2017 Service cost for benefits earned $ 196 $ 221 $ 391 $ 442 Interest cost on projected benefit obligation 654 588 1,308 1,176 Net amortization and deferrals (1,189 ) (1,046 ) (2,378 ) (2,092 ) Total postretirement benefit income $ (339 ) $ (237 ) $ (679 ) $ (474 ) The components of net periodic benefit (income) other than the service cost component are included in Other (income) expense, net in the Consolidated Statement of Income and Comprehensive Income. Beginning in 2018, under the revised FASB guidance adopted in the first quarter of 2018, only the service cost component of net periodic benefit (income) cost is a component of operating profit in the Consolidated Statements of Income and Comprehensive Income and the other components of net periodic benefit cost are now included in Other (income), net. As a result of this change, Other income increased by approximately $6.7 million and $7.4 million in the three months ended June 30, 2018 and 2017 , respectively, and by approximately $13.3 million and $14.9 million in the six months ended June 30, 2018 and 2017 , respectively, compared to what the Other (income) expense, net would have been under the previous method. The retroactive $7.4 million reduction in operating profit for the three months ended June 30, 2017 was reflected as a $1.6 million increase in cost of goods sold, a $2.4 million increase in research and development expenses, and a $3.4 million increase in selling and administrative expenses. The retroactive $14.9 million reduction in operating profit for the six months ended June 30, 2017 was reflected as a $3.2 million increase in cost of goods sold, a $4.9 million increase in research and development expenses, and a $6.8 million increase in selling and administrative expenses. The Company expects to contribute approximately $5.0 million to its postretirement benefits other than pension plans during 2018 . In the six months ended June 30, 2018 $2.4 million of contributions were made. |
Financial Instruments
Financial Instruments | 6 Months Ended |
Jun. 30, 2018 | |
Investments, All Other Investments [Abstract] | |
Financial Instruments | 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 1 or Level 3, other than those included in pension asset trusts as discussed in Note 14 of our 2017 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 immaterial as of June 30, 2018 . The principal amounts and the estimated fair values of financial instruments at June 30, 2018 and December 31, 2017 consisted of the following: June 30, 2018 December 31, 2017 (DOLLARS IN THOUSANDS) Principal Fair Value Principal Fair Value Cash and cash equivalents (1) $ 322,423 $ 322,423 $ 368,046 $ 368,046 Credit facilities and bank overdrafts (2) 115,078 115,078 7,993 7,993 Long-term debt: (3) Senior notes - 2007 250,000 278,720 250,000 293,232 Senior notes - 2013 300,000 294,645 300,000 304,219 Euro Senior notes - 2016 577,700 599,111 594,400 627,782 Senior notes - 2017 500,000 452,689 500,000 525,906 _______________________ (1) The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of those instruments. (2) The carrying amount approximates fair value as the interest rate is reset frequently based on current market rates as well as the short maturity of those instruments. (3) The fair value of the Company's long-term debt was calculated using discounted cash flows applying current interest rates and current credit spreads based on its own credit risk. Derivatives The Company periodically enters into foreign currency forward contracts with the objective of reducing exposure to cash flow volatility associated with its intercompany loans, foreign currency receivables and payables, and anticipated purchases of certain raw materials used in operations. These contracts generally involve the exchange of one currency for a second currency at a future date, have maturities not exceeding twelve months and are with counterparties which are major international financial institutions. During the six months ended June 30, 2018 and the year ended December 31, 2017 , the Company entered into several forward currency contracts which qualified as net investment hedges, in order to mitigate a portion of its net European investments from foreign currency risk. The effective portions of net investment hedges are recorded in other comprehensive income (“OCI”) as a component of Foreign currency translation adjustments in the accompanying Consolidated Statement of Income and Comprehensive Income. Realized gains/(losses) are deferred in accumulated other comprehensive income (loss) ("AOCI") where they will remain until the net investments in the Company's European subsidiaries are divested. Four of these forward currency contracts matured during the six months ended June 30, 2018 and as of June 30, 2018 , there were no remaining contracts outstanding. Subsequent to the issuance of the Euro Senior Notes - 2016 during the first quarter of 2016, the Company designated the debt 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 Statement of Income and Comprehensive Income. During the year ended December 31, 2017 , the Company entered into 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 OCI as a component of gains/(losses) on derivatives qualifying as hedges in the accompanying Consolidated Statement of Income and Comprehensive Income. Realized gains/(losses) in AOCI related to cash flow hedges of raw material purchases are recognized as a component of Cost of goods sold in the accompanying Consolidated Statement of Income and Comprehensive Income in the same period as the related costs are recognized. The Company maintains various interest rate swap agreements that effectively convert the fixed rate on a portion of its long-term borrowings to a variable short-term rate based on the LIBOR plus an interest markup. These swaps are designated as fair value hedges. Amounts recognized in Interest expense were immaterial for the three and six months ended June 30, 2018 and 2017 . In the second quarter of 2018, the Company entered into a foreign currency contract and two interest rate swap agreements, which are contingent upon the closing of the Frutarom acquisition, for a total notional amount of $1.9 billion . As of June 30, 2018 , the changes in fair value of the foreign currency contract resulted in an $11.0 million pre-tax gain included in Other income, net and the two interest rate swaps resulted in a $25.0 million pre-tax loss included in Interest expense in the accompanying Consolidated Statement of Income and Comprehensive Income. The Company has previously entered into interest rate swap agreements to hedge the anticipated issuance of fixed-rate debt, which are designated as cash flow hedges. The amount of gains and losses realized upon termination of these agreements is amortized over the life of the corresponding debt issuance. The following table shows the notional amount of the Company’s derivative instruments outstanding as of June 30, 2018 and December 31, 2017 : (DOLLARS IN THOUSANDS) June 30, 2018 December 31, 2017 Non-Deal Contingent Swaps Foreign currency contracts $ 531,092 $ 896,947 Interest rate swaps 150,000 150,000 Deal Contingent Swaps Foreign currency contract 1,000,000 — Interest rate swaps 898,513 — The following tables show the Company’s derivative instruments measured at fair value (Level 2 of the fair value hierarchy), as reflected in the Consolidated Balance Sheet as of June 30, 2018 and December 31, 2017 : June 30, 2018 (DOLLARS IN THOUSANDS) Fair Value of Fair Value of Total Fair Value Derivative assets (a) Foreign currency contracts $ 5,525 $ 17,172 $ 22,697 Derivative liabilities (b) Foreign currency contract 250 5,901 6,151 Interest rate swaps 3,799 24,937 28,736 Total derivative liabilities $ 4,049 $ 30,838 $ 34,887 December 31, 2017 (DOLLARS IN THOUSANDS) Fair Value of Fair Value of Total Fair Value Derivative assets (a) Foreign currency contracts $ 1,159 $ 3,978 $ 5,137 Derivative liabilities (b) Foreign currency contracts 7,842 4,344 12,186 Interest rate swaps 1,369 — 1,369 Total derivative liabilities $ 9,211 $ 4,344 $ 13,555 _______________________ (a) Derivative assets are recorded to Prepaid expenses and other current assets in the Consolidated Balance Sheet. (b) Derivative liabilities are recorded as Other current liabilities in the Consolidated Balance Sheet. The following table shows the effect of the Company’s derivative instruments which were not designated as hedging instruments in the Consolidated Statement of Income and Comprehensive Income for the three and six months ended June 30, 2018 and 2017 (in thousands): Amount of Gain (Loss) Location of Gain (Loss) Recognized in Income on Derivative (DOLLARS IN THOUSANDS) Three Months Ended June 30, 2018 2017 Foreign currency contracts $ 4,685 $ (3,054 ) Other (income), net Deal contingent swaps Foreign currency contracts 10,979 — Other (income), net Interest rate swaps (24,937 ) — Interest expense $ (9,273 ) $ (3,054 ) Amount of Gain (Loss) Location of Gain (Loss) Recognized in Income on Derivative Six Months Ended June 30, (DOLLARS IN THOUSANDS) 2018 2017 Foreign currency contracts (1) $ 1,070 $ (13,181 ) Other (income), net Deal contingent swaps Foreign currency contracts 10,979 — Other (income), net Interest rate swaps (24,937 ) — Interest expense $ (12,888 ) $ (13,181 ) _______________________ (1) Most of these 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 instruments designated as cash flow and net investment hedging instruments, net of tax, in the Consolidated Statement of Income and Comprehensive Income for the three and six months ended June 30, 2018 and 2017 (in thousands): 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 June 30, Three Months Ended June 30, 2018 2017 2018 2017 Derivatives in Cash Flow Hedging Relationships: Foreign currency contracts $ 10,241 $ (6,328 ) Cost of goods sold $ (2,330 ) $ 1,789 Interest rate swaps (1) 216 (5,439 ) Interest expense (216 ) (186 ) Derivatives in Net Investment Hedging Relationships: Foreign currency contracts 178 (2,082 ) N/A — — Euro Senior notes - 2016 28,682 (19,780 ) N/A — — Total $ 39,317 $ (33,629 ) $ (2,546 ) $ 1,603 Amount of (Loss) Gain Recognized in OCI on Derivative (Effective Portion) Location of (Loss) Gain Reclassified from AOCI into Income (Effective Portion) Amount of (Loss) Gain Reclassified from Accumulated OCI into Income (Effective Portion) Six Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Derivatives in Cash Flow Hedging Relationships: Foreign currency contracts $ 9,498 $ (9,276 ) Cost of goods sold $ (4,523 ) $ 2,247 Interest rate swaps (1) 432 (4,243 ) Interest expense (432 ) (357 ) Derivatives in Net Investment Hedging Relationships: Foreign currency contracts (518 ) (3,128 ) N/A — — Euro Senior notes - 2016 12,705 (31,189 ) N/A — — Total $ 22,117 $ (47,836 ) $ (4,955 ) $ 1,890 _______________________ (1) Interest rate swaps were entered into as pre-issuance hedges for bond offerings. The ineffective portion of the above noted cash flow hedges and net investment hedges were not material during the three and six months ended June 30, 2018 and 2017 . The Company expects that approximately $2.4 million (net of tax) of derivative loss included in AOCI at June 30, 2018 , based on current market rates, will be reclassified into earnings within the next 12 months. The majority of this amount will vary due to fluctuations in foreign currency exchange rates. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income (Loss) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Accumulated Other Comprehensive Income (Loss) | following tables present changes in the accumulated balances for each component of other comprehensive income, including current period other comprehensive income and reclassifications out of accumulated other comprehensive income: (DOLLARS IN THOUSANDS) Foreign Currency Translation Adjustments (Losses) Gains on Derivatives Qualifying as Hedges Pension and Postretirement Liability Adjustment Total Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2017 $ (297,416 ) $ (10,332 ) $ (329,734 ) $ (637,482 ) OCI before reclassifications (70,461 ) 4,971 186 (65,304 ) Amounts reclassified from AOCI — 4,955 5,333 10,288 Net current period other comprehensive income (loss) (70,461 ) 9,926 5,519 (55,016 ) Accumulated other comprehensive (loss) income, net of tax, as of June 30, 2018 $ (367,877 ) $ (406 ) $ (324,215 ) $ (692,498 ) (DOLLARS IN THOUSANDS) Foreign Currency Translation Adjustments (Losses) Gains on Derivatives Qualifying as Hedges Pension and Postretirement Liability Adjustment Total Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2016 $ (352,025 ) $ 7,604 $ (335,674 ) $ (680,095 ) OCI before reclassifications 22,304 (11,629 ) — 10,675 Amounts reclassified from AOCI (12,214 ) (a) (1,890 ) 7,323 (6,781 ) Net current period other comprehensive income (loss) 10,090 (13,519 ) 7,323 3,894 Accumulated other comprehensive (loss) income, net of tax, as of June 30, 2017 $ (341,935 ) $ (5,915 ) $ (328,351 ) $ (676,201 ) _______________________ (a) Represents a foreign currency exchange gain from the release of a currency translation adjustment upon the liquidation of a foreign entity in 2017. The following table provides details about reclassifications out of accumulated other comprehensive income to the Consolidated Statement of Income and Comprehensive Income: Six Months Ended June 30, Affected Line Item in the (DOLLARS IN THOUSANDS) 2018 2017 (Losses) gains on derivatives qualifying as hedges Foreign currency contracts $ (5,169 ) $ 2,568 Cost of goods sold Interest rate swaps (432 ) (357 ) Interest expense Tax 646 (321 ) Provision for income taxes Total $ (4,955 ) $ 1,890 Total, net of income taxes (Losses) gains on pension and postretirement liability adjustments Prior service cost $ 3,543 $ 3,512 (a) Actuarial losses (10,206 ) (12,982 ) (a) Tax 1,330 2,147 Provision for income taxes Total $ (5,333 ) $ (7,323 ) Total, net of income taxes _______________________ (a) The amortization of prior service cost and actuarial loss is included in the computation of net periodic benefit cost. Refer to Note 14 of our 2017 Form 10-K for additional information regarding net periodic benefit cost. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | arantees and Letters of Credit The Company has various bank guarantees and letters of credit which are available for use to support its ongoing business operations and to satisfy governmental requirements associated with pending litigation in various jurisdictions. At June 30, 2018 , we had total bank guarantees and standby letters of credit of approximately $49.4 million with various financial institutions. Included in the above aggregate amount is a total of $13.5 million for other assessments in Brazil for various income tax and indirect tax disputes related to fiscal years 1998-2011. There were no material amounts utilized under the standby letters of credit as of June 30, 2018 . 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 $11.2 million as of June 30, 2018 . Lines of Credit The Company has various lines of credit which are available to support its ongoing business operations. As of June 30, 2018 , we had available lines of credit of approximately $102.3 million with various financial institutions, in addition to the $1.0 billion of capacity under the Amended Credit Facility discussed in Note 6 of the Consolidated Financial Statements. There were no material amounts drawn down pursuant to these lines of credit as of June 30, 2018 . 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 will be incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable resolutions could occur, assessing contingencies is highly sensitive and requires judgments about future events. On at least a quarterly basis, the Company reviews contingencies related to litigation to determine the adequacy of accruals. The amount of ultimate loss may differ from these estimates and further events may require the Company to increase or decrease the amounts it has accrued on any matter. Periodically, the Company assesses its insurance coverage for all known claims, where applicable, taking into account aggregate coverage by occurrence, limits of coverage, self-insured retentions and deductibles, historical claims experience and claims experience with its insurance carriers. The liabilities are recorded at management’s best estimate of the probable outcome of the lawsuits and claims, taking into consideration the facts and circumstances of the individual matters as well as past experience on similar matters. At each balance sheet date, the key issues that management assesses are whether it is probable that a loss as to asserted or unasserted claims will be 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. Environmental Over the past 20 years, various federal and state authorities and private parties have claimed that we are a Potentially Responsible Party (“PRP”) as a generator of waste materials for alleged pollution at a number of waste sites operated by third parties located principally in New Jersey and have sought to recover costs incurred and to be incurred to clean up the sites. The Company has been identified as a PRP at eight facilities operated by third parties at which investigation and/or remediation activities may be ongoing. The Company analyzes potential liability on at least a quarterly basis and accrues for environmental liabilities when they are probable and estimable. The Company estimates its share of the total future cost for these sites to be less than $5 million . While joint and several liability is authorized under federal and state environmental laws, the Company believes the amounts it has paid and anticipates paying in the future for clean-up costs and damages at all sites are not and will not have a material adverse effect on its financial condition, results of operations or liquidity. This assessment is based upon, among other things, the involvement of other PRPs at most of the sites, the status of the proceedings, including various settlement agreements and consent decrees, and the extended time period over which payments will likely be made. There can be no assurance, however, that future events will not require the Company to materially increase the amounts it anticipates paying for clean-up costs and damages at these sites, and that such increased amounts will not have a material adverse effect on its financial condition, results of operations or cash flows. China Facilities Guangzhou Flavors 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 Flavors plant. The zoning, if changed, would prevent the Company from continuing to manufacture product at 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. The net book value of the existing plant was approximately $71 million as of June 30, 2018 . 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 2020. The Company received the first payment of $15 million in the fourth quarter of 2017. No additional amounts have been received since the fourth quarter of 2017. The net book value of the current plant was approximately $23 million as of June 30, 2018 . The Company expects to relocate approximately half of production capacity of the facility by the middle of 2019 and the remainder of the production capacity of the facility by the middle of 2020. Total China Operations The total net book value of all five plants in China ( one of which is currently under construction) was approximately $161 million as of June 30, 2018 . 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. 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 $24.7 million . The Brazilian matters take an extended period of time to proceed through the judicial process and there are a limited number of rulings to date. ZoomEssence As previously disclosed, in March 2012, ZoomEssence, Inc. filed a complaint against the Company in the U.S. District Court for the District of New Jersey alleging trade secret misappropriation, breach of contract and unjust enrichment in connection with certain spray dry technology disclosed to the Company. ZoomEssence sought an injunction and monetary damages. In November 2014, the Company filed a counterclaim against ZoomEssence alleging trade secret misappropriation, breach of contract, breach of the implied covenant of good faith and fair dealing, unjust enrichment, misappropriation of confidential and proprietary information, common law unfair competition, tortious interference with contractual relations, and conversion. During the second quarter of 2017, the Company and ZoomEssence mutually agreed to settle all claims and counterclaims. The parties agreed to dismiss their claims against one another, with prejudice and without any admission of liability or wrongful conduct, to avoid any further expense and disruption from the litigation. The complaint was dismissed, with prejudice, on July 5, 2017. Under the settlement agreement, the Company made a one-time payment to ZoomEssence of $56 million during the second quarter of 2017 and the parties exchanged full mutual releases. Accordingly, the Company recorded an additional charge of $1.0 million during the second quarter of 2017. FDA-Mandated Product Recall The Company periodically incurs product liability claims based on product that is sold to customers that may be defective or otherwise not in accordance with the customer’s requirements. In the first quarter of 2017, the Company was made aware of a claim for product that was subject to an FDA-mandated product recall. As of June 30, 2018 , the Company had recorded total charges of approximately $17.5 million with respect to this claim, of which $5.0 million was recorded in the three months ended March 31, 2018. The Company settled the claim with the customer in the first quarter of 2018 for a total of $16.0 million , of which $3.0 million was paid in the fourth quarter of 2017 and $13.0 million was paid during the three months ended March 31, 2018. The remaining accrual of approximately $1.5 million represents management's best estimate of losses related to claims from other affected parties. The Company does not believe that the ultimate settlement of the claim will have a material impact on its financial condition. Subsequent to the end of the second quarter of 2018, the Company finalized an agreement with the supplier of the effected product for reimbursement of $9.8 million , in full and final settlement from the supplier. The Company continues to pursue reimbursement of all or a portion of costs, once incurred, from other parties including its insurance company; however, the nature, timing and amount of any additional such reimbursement cannot be determined at this time. 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 $12 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. |
Consolidated Financial Statem19
Consolidated Financial Statements (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation These interim statements and related management’s discussion and analysis should be read in conjunction with the Consolidated Financial Statements and the related notes and management’s discussion and analysis of results of operations, liquidity and capital resources included in our 2017 Annual Report on Form 10-K (“ 2017 Form 10-K”). These interim statements are unaudited. The year-end balance sheet data included in this Form 10-Q was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America. We have historically operated and continue to operate on a 52/53 week fiscal year ending on the Friday closest to the last day of the quarter. For ease of presentation, June 30 and December 31 are used consistently throughout this Form 10-Q and these interim financial statements and related notes to represent the period-end dates. For the 2018 and 2017 quarters, the actual closing dates were June 29 and June 30, respectively. The unaudited interim financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair statement of the results for the periods presented. When used herein, the terms “IFF,” the “Company,” “we,” “us” and “our” mean International Flavors & Fragrances Inc. and its consolidated subsidiaries. |
Reclassifications and Revisions | Reclassifications and Revisions Certain prior year amounts have been reclassified and revised to conform to current year presentation. As discussed below and in conformity with the Financial Accounting Standards Board's ("FASB") amendments to the Compensation - Retirement Benefits guidance, the Company has reclassified certain components of net periodic benefit expense (income) to Other income (expense), net. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2018, the FASB issued Accounting Standards Update ("ASU") 2018-07, "Compensation—Stock Compensation (Topic 718)" intended to reduce cost and complexity and to improve financial reporting for nonemployee share-based payments. This guidance expands the scope of Topic 718, Compensation-Stock Compensation which currently only includes share-based payments to employees to include share-based payments issued to nonemployees for goods or services. This guidance is effective for public companies for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. The Company is currently evaluating the impact this guidance will have on its Consolidated Financial Statements, but does not expect this guidance to have a material impact on its Consolidated Financial Statements. In February 2018, FASB issued ASU 2018-02, "Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" which allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Act, in addition to requiring certain disclosures about stranded tax effects. This guidance is effective for periods beginning after December 15, 2018, with an election to adopt early. The Company is currently evaluating the impact this guidance may have on its Consolidated Financial Statements. In August 2017, FASB issued ASU 2017-12, "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities" which eliminates the requirement to separately measure and present hedge ineffectiveness and aligns the presentation of hedge gains and losses with the underlying hedge item. This guidance is effective for fiscal years beginning after December 15, 2018. Early adoption is permitted. The amended presentation and disclosure requirements are to be applied prospectively while the amendments to cash flow and net investment hedge relationships are to be applied on a modified retrospective basis . The Company is currently evaluating the impact this guidance will have on its Consolidated Financial Statements, but does not expect this guidance to have a material impact on its Consolidated Financial Statements. In May 2017, the FASB issued 2017-09, "Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting" which clarifies changes to the terms or conditions of a share-based payment award that require an entity to apply modification accounting. This guidance is effective for the current year. The Company has determined that this guidance does not have an impact on its Consolidated Financial Statements as it is not the Company's practice to modify the terms or conditions of a share-based payment award after it has been granted. In March 2017, the FASB issued 2017-07, "Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost" which requires employers who present a measure of operating income in their statement of income to include only the service cost component of net periodic pension cost and postretirement costs in operating expenses. This guidance is effective, and as required, has been applied on a full retrospective basis. The impact of the adoption of this standard on January 1, 2018 was a decrease in operating profit by approximately $7.4 million in the three months ended June 30, 2017 and by approximately $14.9 million in the six months ended June 30, 2017 , and a corresponding increase in Other (income) expense, net as presented in the Company's Consolidated Statement of Income and Comprehensive Income. There was no impact to Net income or Net Income per share in either period. See Note 10 of the Consolidated Financial Statements for further details. The new guidance also limits the amount of net periodic benefit cost eligible for capitalization to assets. The new guidance permits only the service cost component of net periodic benefit cost to be eligible for capitalization. The Company applied the practical expedient that permits the use of amounts previously disclosed as the basis for retrospective application and, as provided under the practical expedient, has not presented the income statement impact based on the capitalization of the applicable costs. In August 2016, the FASB issued 2016-15, "Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments" which requires changes to the classification of certain activities within the statement of cash flows. This guidance is effective for the current year, and the Company has determined that this adoption does not have an impact on its Consolidated Statement of Cash Flows. In June 2016, the FASB issued 2016-13, "Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments" which requires issuers to measure expected credit losses for financial assets based on historical experience, current conditions and reasonable and supportable forecasts. As such, an entity will use forward-looking information to estimate credit losses. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for the fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements, but does not expect this guidance to have a material impact on its Consolidated Financial Statements. In February 2016, the FASB issued 2016-02, "Leases (Topic 842)", with subsequent amendments, which requires changes to the accounting for leases. The new guidance establishes a new lease accounting model that requires entities to record assets and liabilities related to leases on the balance sheet for certain types of leases. The guidance will be effective for annual and interim periods beginning after December 15, 2018. The Company expects to adopt this guidance effective December 29, 2018, the first day of the Company’s 2019 fiscal year, and that the adoption of this guidance will result in significant increases to assets and liabilities on its Consolidated Balance Sheet. The Company is still evaluating the impact of this guidance on its Consolidated Statement of Income and Comprehensive Income and Consolidated Statement of Cash Flows. The Company has begun to evaluate the nature of its leases and has compiled a preliminary analysis of the type and location of its leases. The Company expects that the significant portion of its lease liabilities and right of use assets will relate to property, with additional lease and corresponding right of use assets in existence that relate to vehicles and machinery. Adoption of ASC Topic 606, Revenue from Contracts with Customers In May 2014, the FASB issued 2014-09, "Revenue from Contracts with Customers", with subsequent amendments, that provides for a comprehensive model to be used in accounting for revenue arising from contracts with customers (ASC Topic 606, Revenue from Contracts with Customers) (the “Revenue Standard”). Under the Revenue Standard, revenue is recognized to reflect the transfer of goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. Companies have the option to apply the new guidance under a retrospective approach to each prior reporting period presented or a modified retrospective approach with the cumulative effect of initially applying the new guidance recognized at the date of initial application within the Consolidated Balance Sheet. The new Revenue Standard became effective for annual reporting periods beginning after December 15, 2017, and the Company has adopted the new revenue standard using the modified retrospective approach on December 30, 2017, the first day of the Company’s 2018 fiscal year. The Company creates and manufactures flavors and fragrances. Approximately 90% of its products, principally Flavors compounds and Fragrances compounds, are customized to customer specifications and have no alternative use other than the sale to the specific customer (“Compounds products”). The remaining revenue is derived largely from Fragrance Ingredients products that, generally, are commodity products with alternative uses and not customized (“Ingredients products”). With respect to the vast majority of the Company’s contracts for Compounds products, the Company currently recognizes revenue on the transfer of control of the product at a point in time as the Company does not have an “enforceable right to payment for performance to date” (as set out in the Revenue Standard). 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. With respect to the Company’s contracts related to Ingredients products, the Company currently recognizes revenue on the transfer of control of the product at a point in time as such products generally have alternative uses and the Company does not have an “enforceable right to payment for performance to date.” As the Company adopted the Revenue Standard using the modified retrospective method effective the first day of its 2018 fiscal year, results for its 2018 fiscal year are presented under the Revenue Standard while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under ASC Topic 605, which required that revenue was accounted for when the earnings process was complete. |
Revenue Recognition | The Company recognizes revenue when control of the promised goods is transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods. Sales, value add, and other taxes the Company collects are excluded from revenues. The Company receives payment in accordance with standard customer terms. The following table presents the Company's revenues disaggregated by business unit: Three Months Ended June 30, Six Months Ended June 30, (DOLLARS IN THOUSANDS) 2018 2017 (a) 2018 2017 (a) Flavor Compounds $ 450,540 $ 414,323 $ 899,559 $ 820,487 Fragrance Compounds Consumer Fragrances 274,586 253,258 554,849 505,891 Fine Fragrances 97,448 91,432 195,817 179,199 Fragrance Ingredients 97,442 83,848 200,719 165,577 Total revenues $ 920,016 $ 842,861 $ 1,850,944 $ 1,671,154 _______________________ (a) Prior period amounts have not been adjusted based on the modified retrospective method. The following table presents our revenues disaggregated by region, based on the region of our customers: Three Months Ended June 30, Six Months Ended June 30, (DOLLARS IN THOUSANDS) 2018 2017 (a) 2018 2017 (a) Europe, Africa and Middle East $ 292,848 $ 259,292 $ 602,161 $ 516,976 Greater Asia 242,221 224,703 485,779 447,523 North America 249,054 230,529 490,199 449,357 Latin America 135,893 128,337 272,805 257,298 Total revenues $ 920,016 $ 842,861 $ 1,850,944 $ 1,671,154 _______________________ (a) Prior period amounts have not been adjusted based on the modified retrospective method. Flavors and Fragrances Compounds Revenues The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties and payment terms (which vary by customer) are identified, the contract has commercial substance, and collectability of consideration is probable. Consistent with our past practice, the amount of revenue recognized is adjusted at the time of sale for expected discounts and rebates (“Variable Consideration”). The Company generates revenues primarily by manufacturing customized Flavor compounds and Fragrance compounds for the exclusive use of our customers. The Company combines the shipment of goods with their manufacture to account for both shipment and manufacture as the sole performance obligation. With respect to the vast majority of the Company’s contracts for Compounds products , the Company recognizes a sale at the point in time when it ships the product from its manufacturing facility to its customer, as this is the time when control of the goods has transferred to the customer. The amount of consideration received and revenue recognized is impacted by the Variable Consideration the Company has agreed with its customers. The Company estimates Variable Consideration amounts for each customer based on the specific agreement, an analysis of historical volumes and the current activity with that customer. The Company reassesses its estimates of Variable Consideration at each reporting date throughout the contract period and updates the estimate until the uncertainty is resolved. During the current period, changes to estimates of Variable Consideration have been immaterial. With respect to a small number of contracts for the sale of Compounds products, the Company recognizes revenue over time as it manufactures customized compounds that do not have an alternative use and for which the contracts provide the Company with an enforceable right to payment, including a reasonable profit, at all times during the contract term commencing with the manufacturing of the goods. When revenue is recognized over time, the amount of revenue recognized is based on the extent of progress towards completion of the promised goods. The Company generally uses the output method to measure progress for its contracts as this method reflects the transfer of goods to the customer. Once customization begins, the manufacturing process is generally completed within a two week period. Due to the short time frame for production, there is little estimation uncertainty in the process. In addition, due to the customized nature of our products, our returns are not material. Fragrance Ingredients Revenues The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties and payment terms (which vary by customer) are identified, the contract has commercial substance, and collectability of consideration is probable. The Company generates revenues primarily by manufacturing Ingredients products for the use of our customers. The Company combines the shipment of goods with their manufacture to account for both shipment and manufacture as the sole performance obligation. Generally, the Company recognizes a sale at the time when it ships the product from their manufacturing facility to their customer, as this is the point when control of the goods or services has transferred to the customer. The amount of consideration received and revenue recognized is impacted by discounts offered to its customers. The Company estimates discounts based on an analysis of historical experience and current activity. The Company assesses its estimates of discounts at each reporting date throughout the contract period and updates its estimates until the uncertainty has been resolved. During the current period, changes to estimates of discounts have been immaterial. |
Consolidated Financial Statem20
Consolidated Financial Statements (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Accounting Policies [Abstract] | |
Contract Asset and Accounts Receivable | The following table reflects the balances in our contract assets and accounts receivable for the six months ended June 30, 2018 and December 31, 2017 : (DOLLARS IN THOUSANDS) June 30, 2018 At adoption Receivables (included in Trade receivables) $ 737,477 $ 677,055 Contract asset - Short term 1,903 4,449 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Reconciliation of Shares Used in Computation of Basic and Diluted Net Income Per Share | A reconciliation of the shares used in the computation of basic and diluted net income per share is as follows: Three Months Ended June 30, Six Months Ended June 30, (SHARES IN THOUSANDS) 2018 2017 2018 2017 Basic 79,065 79,072 79,041 79,088 Assumed dilution under stock plans 238 233 306 272 Diluted 79,303 79,305 79,347 79,360 |
Goodwill and Other Intangible22
Goodwill and Other Intangible Assets, Net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Movements in Goodwill | Movements in goodwill during 2018 were as follows: (DOLLARS IN THOUSANDS) Goodwill Balance at December 31, 2017 $ 1,156,288 Acquisitions 22 Foreign exchange (7,724 ) Balance at June 30, 2018 $ 1,148,586 |
Schedule of Other Intangible Assets, Net | Other intangible assets, net consisted of the following amounts: June 30, December 31, (DOLLARS IN THOUSANDS) 2018 2017 Asset Type Customer relationships $ 402,032 $ 407,636 Trade names & patents 38,146 38,771 Technological know-how 161,331 161,856 Other 24,734 24,814 Total carrying value 626,243 633,077 Accumulated Amortization Customer relationships (116,519 ) (104,800 ) Trade names & patents (16,998 ) (15,241 ) Technological know-how (81,580 ) (76,766 ) Other (19,720 ) (20,483 ) Total accumulated amortization (234,817 ) (217,290 ) Other intangible assets, net $ 391,426 $ 415,787 |
Restructuring and Other Charg23
Restructuring and Other Charges, Net (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Changes in Employee-Related Restructuring Liabilities | Changes in restructuring liabilities during the six months ended June 30, 2018 , were as follows: (DOLLARS IN THOUSANDS) Employee-Related Costs Other Total Balance at December 31, 2017 $ 7,539 $ 418 $ 7,957 Additional charges (reversals), net 1,903 — 1,903 Payments (4,581 ) — (4,581 ) Balance at June 30, 2018 $ 4,861 $ 418 $ 5,279 |
Borrowings (Tables)
Borrowings (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Components of Debt | Debt consists of the following: (DOLLARS IN THOUSANDS) Effective Interest Rate June 30, 2018 December 31, 2017 Senior notes - 2007 (1)(4) 6.40% - 6.82% $ 249,776 $ 249,765 Senior notes - 2013 (1) 3.39 % 298,823 298,670 Euro Senior notes - 2016 (1) 1.99 % 573,514 589,848 Senior notes - 2017 (1) 4.50 % 492,941 492,819 Credit facility LIBOR + 1.125% (2) 103,988 — Bank overdrafts and other 4,590 7,993 Deferred realized gains on interest rate swaps 57 57 1,723,689 1,639,152 Less: Short term borrowings (3) (6,500 ) (6,966 ) $ 1,717,189 $ 1,632,186 _______________________ (1) Amount is net of unamortized discount and debt issuance costs. (2) Represents the rate on drawn down and outstanding balances. Deferred debt issuance costs are immaterial. (3) Includes bank borrowings, commercial paper, overdrafts and current portion of long-term debt. |
Stock Compensation Plans (Table
Stock Compensation Plans (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation Expense and Related Tax Benefits | Stock-based compensation expense and related tax benefits were as follows: Three Months Ended June 30, Six Months Ended June 30, (DOLLARS IN THOUSANDS) 2018 2017 2018 2017 Equity-based awards $ 7,554 $ 7,074 $ 15,173 $ 12,893 Liability-based awards 242 1,298 396 3,051 Total stock-based compensation expense 7,796 8,372 15,569 15,944 Less: Tax benefit (1,335 ) (2,336 ) (2,897 ) (4,549 ) Total stock-based compensation expense, after tax $ 6,461 $ 6,036 $ 12,672 $ 11,395 |
Segment Information (Tables)
Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Reportable Segment Information | Reportable segment information is as follows: Three Months Ended June 30, Six Months Ended June 30, (DOLLARS IN THOUSANDS) 2018 2017 2018 2017 Net sales: Flavors $ 450,540 $ 414,323 $ 899,559 $ 820,487 Fragrances 469,476 428,538 951,385 850,667 Consolidated $ 920,016 $ 842,861 $ 1,850,944 $ 1,671,154 Segment profit: Flavors $ 109,605 $ 96,840 $ 221,169 $ 191,395 Fragrances 80,780 80,993 174,056 158,867 Global expenses (20,572 ) (13,488 ) (44,398 ) (29,781 ) Operational Improvement Initiatives (a) (403 ) (445 ) (1,429 ) (1,066 ) Acquisition Related Costs (b) 4 (6,278 ) 518 (15,066 ) Integration Related Costs (c) (993 ) (731 ) (993 ) (1,923 ) Legal Charges/Credits, net (d) — (1,000 ) — (1,000 ) Tax Assessment (e) — 19 — (5,331 ) Restructuring and Other Charges, net (f) (193 ) (791 ) (910 ) (10,934 ) (Losses) Gains on Sale of Assets (1,264 ) 68 (1,195 ) 89 FDA Mandated Product Recall (g) — (3,500 ) (5,000 ) (3,500 ) Frutarom Acquisition Related Costs (h) (12,455 ) — (12,455 ) — Operating profit 154,509 151,687 329,363 281,750 Interest expense (53,246 ) (17,556 ) (69,841 ) (30,363 ) Other income (expense) 20,655 7,909 21,232 29,140 Income before taxes $ 121,918 $ 142,040 $ 280,754 $ 280,527 (a) For 2018, represents accelerated depreciation related to a plant relocation in India. For 2017, represents accelerated depreciation and idle labor costs in Hangzhou, China. (b) For 2018, represents adjustments to the contingent consideration payable for PowderPure, and transaction costs related to Fragrance Resources and PowderPure within Selling and administrative expenses. For 2017, represents the amortization of inventory "step-up" related to the acquisitions of David Michael, Fragrance Resources and PowderPure, included in cost of goods sold and transaction costs related to the acquisitions of David Michael, Fragrance Resources and PowderPure, included in Selling and administrative expenses. (c) For 2018, represents costs related to the integration of David Michael. For 2017, represents costs related to the integration of David Michael and Fragrance Resources acquisitions. (d) Represents additional charge related to litigation settlement. (e) Represents the reserve for payment of a tax assessment related to commercial rent for prior periods. (f) Represents severance costs related to the 2017 Productivity Program and Taiwan lab closure. (g) Represents management's best estimate of losses related to the previously disclosed FDA mandated recall. (h) Represents transaction-related costs and expenses related to the pending acquisition of Frutarom. |
Net Sales by Destination of Product Delivery | Net sales are attributed to individual regions based upon the destination of product delivery are as follows: Three Months Ended June 30, Six Months Ended June 30, (DOLLARS IN THOUSANDS) 2018 2017 2018 2017 Net sales related to the U.S. $ 234,118 $ 243,815 $ 464,521 $ 449,325 Net sales attributed to all foreign countries 685,898 599,046 1,386,423 1,221,829 |
Employee Benefits (Tables)
Employee Benefits (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Retirement Benefits [Abstract] | |
Pension and Other Defined Contribution Retirement Plan Expenses | Pension and other defined contribution retirement plan expenses included the following components: (DOLLARS IN THOUSANDS) U.S. Plans Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Service cost for benefits earned (1) $ 596 $ 698 $ 1,192 $ 1,395 Interest cost on projected benefit obligation (2) 4,790 4,561 9,580 9,122 Expected return on plan assets (2) (7,740 ) (9,246 ) (15,479 ) (18,492 ) Net amortization and deferrals (2) 1,549 1,793 3,098 3,585 Net periodic benefit income (805 ) (2,194 ) (1,609 ) (4,390 ) Defined contribution and other retirement plans (1) 3,081 2,524 5,771 4,779 Total expense $ 2,276 $ 330 $ 4,162 $ 389 (DOLLARS IN THOUSANDS) Non-U.S. Plans Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Service cost for benefits earned (1) $ 4,470 $ 5,610 $ 8,939 $ 11,220 Interest cost on projected benefit obligation (2) 4,338 3,911 8,675 7,822 Expected return on plan assets (2) (12,032 ) (12,334 ) (24,064 ) (24,668 ) Net amortization and deferrals (2) 2,972 3,988 5,943 7,977 Net periodic benefit (income) cost (252 ) 1,175 (507 ) 2,351 Defined contribution and other retirement plans (1) 1,706 1,616 3,258 2,913 Total expense $ 1,454 $ 2,791 $ 2,751 $ 5,264 |
Postretirement Benefits Other Than Pension Expenses | . |
Financial Instruments (Tables)
Financial Instruments (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Investments, All Other Investments [Abstract] | |
Carrying Amount and Estimated Fair Values of Financial Instruments | The principal amounts and the estimated fair values of financial instruments at June 30, 2018 and December 31, 2017 consisted of the following: June 30, 2018 December 31, 2017 (DOLLARS IN THOUSANDS) Principal Fair Value Principal Fair Value Cash and cash equivalents (1) $ 322,423 $ 322,423 $ 368,046 $ 368,046 Credit facilities and bank overdrafts (2) 115,078 115,078 7,993 7,993 Long-term debt: (3) Senior notes - 2007 250,000 278,720 250,000 293,232 Senior notes - 2013 300,000 294,645 300,000 304,219 Euro Senior notes - 2016 577,700 599,111 594,400 627,782 Senior notes - 2017 500,000 452,689 500,000 525,906 _______________________ (1) The carrying amount of cash and cash equivalents approximates fair value due to the short maturity of those instruments. (2) The carrying amount approximates fair value as the interest rate is reset frequently based on current market rates as well as the short maturity of those instruments. (3) The fair value of the Company's long-term debt was calculated using discounted cash flows applying current interest rates and current credit spreads based on its own credit risk. |
Derivative Instruments Notional Amount Outstanding | The following table shows the notional amount of the Company’s derivative instruments outstanding as of June 30, 2018 and December 31, 2017 : (DOLLARS IN THOUSANDS) June 30, 2018 December 31, 2017 Non-Deal Contingent Swaps Foreign currency contracts $ 531,092 $ 896,947 Interest rate swaps 150,000 150,000 Deal Contingent Swaps Foreign currency contract 1,000,000 — Interest rate swaps 898,513 — |
Derivative Instruments Measured at Fair Value | The following tables show the Company’s derivative instruments measured at fair value (Level 2 of the fair value hierarchy), as reflected in the Consolidated Balance Sheet as of June 30, 2018 and December 31, 2017 : June 30, 2018 (DOLLARS IN THOUSANDS) Fair Value of Fair Value of Total Fair Value Derivative assets (a) Foreign currency contracts $ 5,525 $ 17,172 $ 22,697 Derivative liabilities (b) Foreign currency contract 250 5,901 6,151 Interest rate swaps 3,799 24,937 28,736 Total derivative liabilities $ 4,049 $ 30,838 $ 34,887 December 31, 2017 (DOLLARS IN THOUSANDS) Fair Value of Fair Value of Total Fair Value Derivative assets (a) Foreign currency contracts $ 1,159 $ 3,978 $ 5,137 Derivative liabilities (b) Foreign currency contracts 7,842 4,344 12,186 Interest rate swaps 1,369 — 1,369 Total derivative liabilities $ 9,211 $ 4,344 $ 13,555 |
Derivative Instruments Which Were Not Designated as Hedging Instruments | The following table shows the effect of the Company’s derivative instruments which were not designated as hedging instruments in the Consolidated Statement of Income and Comprehensive Income for the three and six months ended June 30, 2018 and 2017 (in thousands): Amount of Gain (Loss) Location of Gain (Loss) Recognized in Income on Derivative (DOLLARS IN THOUSANDS) Three Months Ended June 30, 2018 2017 Foreign currency contracts $ 4,685 $ (3,054 ) Other (income), net Deal contingent swaps Foreign currency contracts 10,979 — Other (income), net Interest rate swaps (24,937 ) — Interest expense $ (9,273 ) $ (3,054 ) Amount of Gain (Loss) Location of Gain (Loss) Recognized in Income on Derivative Six Months Ended June 30, (DOLLARS IN THOUSANDS) 2018 2017 Foreign currency contracts (1) $ 1,070 $ (13,181 ) Other (income), net Deal contingent swaps Foreign currency contracts 10,979 — Other (income), net Interest rate swaps (24,937 ) — Interest expense $ (12,888 ) $ (13,181 ) _______________________ (1) Most of these net gains (losses) offset any recognized gains (losses) arising from the revaluation of the related intercompany loans during the same respective periods. |
Derivative Instruments Designated as Cash Flow and Net Investment Hedging Instruments | The following table shows the effect of the Company’s derivative instruments designated as cash flow and net investment hedging instruments, net of tax, in the Consolidated Statement of Income and Comprehensive Income for the three and six months ended June 30, 2018 and 2017 (in thousands): 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 June 30, Three Months Ended June 30, 2018 2017 2018 2017 Derivatives in Cash Flow Hedging Relationships: Foreign currency contracts $ 10,241 $ (6,328 ) Cost of goods sold $ (2,330 ) $ 1,789 Interest rate swaps (1) 216 (5,439 ) Interest expense (216 ) (186 ) Derivatives in Net Investment Hedging Relationships: Foreign currency contracts 178 (2,082 ) N/A — — Euro Senior notes - 2016 28,682 (19,780 ) N/A — — Total $ 39,317 $ (33,629 ) $ (2,546 ) $ 1,603 Amount of (Loss) Gain Recognized in OCI on Derivative (Effective Portion) Location of (Loss) Gain Reclassified from AOCI into Income (Effective Portion) Amount of (Loss) Gain Reclassified from Accumulated OCI into Income (Effective Portion) Six Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Derivatives in Cash Flow Hedging Relationships: Foreign currency contracts $ 9,498 $ (9,276 ) Cost of goods sold $ (4,523 ) $ 2,247 Interest rate swaps (1) 432 (4,243 ) Interest expense (432 ) (357 ) Derivatives in Net Investment Hedging Relationships: Foreign currency contracts (518 ) (3,128 ) N/A — — Euro Senior notes - 2016 12,705 (31,189 ) N/A — — Total $ 22,117 $ (47,836 ) $ (4,955 ) $ 1,890 |
Accumulated Other Comprehensi29
Accumulated Other Comprehensive Income (Loss) (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
Schedule of Changes in Accumulated Other Comprehensive Income (Loss) | The following tables present changes in the accumulated balances for each component of other comprehensive income, including current period other comprehensive income and reclassifications out of accumulated other comprehensive income: (DOLLARS IN THOUSANDS) Foreign Currency Translation Adjustments (Losses) Gains on Derivatives Qualifying as Hedges Pension and Postretirement Liability Adjustment Total Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2017 $ (297,416 ) $ (10,332 ) $ (329,734 ) $ (637,482 ) OCI before reclassifications (70,461 ) 4,971 186 (65,304 ) Amounts reclassified from AOCI — 4,955 5,333 10,288 Net current period other comprehensive income (loss) (70,461 ) 9,926 5,519 (55,016 ) Accumulated other comprehensive (loss) income, net of tax, as of June 30, 2018 $ (367,877 ) $ (406 ) $ (324,215 ) $ (692,498 ) (DOLLARS IN THOUSANDS) Foreign Currency Translation Adjustments (Losses) Gains on Derivatives Qualifying as Hedges Pension and Postretirement Liability Adjustment Total Accumulated other comprehensive (loss) income, net of tax, as of December 31, 2016 $ (352,025 ) $ 7,604 $ (335,674 ) $ (680,095 ) OCI before reclassifications 22,304 (11,629 ) — 10,675 Amounts reclassified from AOCI (12,214 ) (a) (1,890 ) 7,323 (6,781 ) Net current period other comprehensive income (loss) 10,090 (13,519 ) 7,323 3,894 Accumulated other comprehensive (loss) income, net of tax, as of June 30, 2017 $ (341,935 ) $ (5,915 ) $ (328,351 ) $ (676,201 ) |
Reclassifications of Accumulated Other Comprehensive Income to Consolidated Statement of Comprehensive Income | The following table provides details about reclassifications out of accumulated other comprehensive income to the Consolidated Statement of Income and Comprehensive Income: Six Months Ended June 30, Affected Line Item in the (DOLLARS IN THOUSANDS) 2018 2017 (Losses) gains on derivatives qualifying as hedges Foreign currency contracts $ (5,169 ) $ 2,568 Cost of goods sold Interest rate swaps (432 ) (357 ) Interest expense Tax 646 (321 ) Provision for income taxes Total $ (4,955 ) $ 1,890 Total, net of income taxes (Losses) gains on pension and postretirement liability adjustments Prior service cost $ 3,543 $ 3,512 (a) Actuarial losses (10,206 ) (12,982 ) (a) Tax 1,330 2,147 Provision for income taxes Total $ (5,333 ) $ (7,323 ) Total, net of income taxes _______________________ (a) The amortization of prior service cost and actuarial loss is included in the computation of net periodic benefit cost. Refer to Note 14 of our 2017 Form 10-K for additional information regarding net periodic benefit cost. |
Consolidated Financial Statem30
Consolidated Financial Statements Consolidated Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Jan. 01, 2018 | |
New Accounting Pronouncement, Early Adoption [Line Items] | |||||||
Decrease in operating profit | $ (11,028) | $ 3,099 | |||||
Tax Cuts and jobs act, income tax expense (benefit) | $ 139,200 | ||||||
Tax Cuts and jobs act, incomplete accounting, transition tax for accumulated foreign earnings, provisional income tax expense | $ (600) | $ 600 | |||||
Decrease in accounts receivable | (99,963) | (77,580) | |||||
Increase in operating expenses | (6,700) | $ (7,400) | $ (13,300) | (14,900) | |||
Products customized to customer specifications that have no alternative use (percent) | 90.00% | ||||||
Net cash provided by operating activities | $ 55,169 | 57,921 | |||||
Inventory, Net | (695,192) | $ (649,448) | (695,192) | ||||
Revenues | 920,016 | 842,861 | 1,850,944 | 1,671,154 | |||
Gross Profit | 398,717 | 372,984 | 804,525 | 736,066 | |||
Net income | 99,149 | 109,795 | 228,564 | $ 225,559 | |||
Decrease in receivables due to factoring | 25,500 | $ 4,700 | |||||
Difference between Revenue Guidance in Effect before and after Topic 606 [Member] | |||||||
New Accounting Pronouncement, Early Adoption [Line Items] | |||||||
Revenues | 1,900 | 2,500 | |||||
Gross Profit | 1,200 | 1,600 | |||||
Net income | $ 900 | $ 1,200 | |||||
Accounting Standards Update 2014-09 [Member] | |||||||
New Accounting Pronouncement, Early Adoption [Line Items] | |||||||
Prepaid Expense and Other Assets | $ 4,400 | ||||||
Inventory, Net | 1,700 | ||||||
Taxes Payable | 600 | ||||||
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | |||||||
New Accounting Pronouncement, Early Adoption [Line Items] | |||||||
Cumulative effect | $ 2,100 |
Consolidated Financial Statem31
Consolidated Financial Statements (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Disaggregation of Revenue [Line Items] | |||||
Revenues | $ 920,016 | $ 842,861 | $ 1,850,944 | $ 1,671,154 | |
Receivables (included in Trade receivables) | 737,477 | 737,477 | $ 677,055 | ||
Contract asset - Short term | 1,903 | 1,903 | $ 4,449 | ||
Europe, Africa and Middle East | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 292,848 | 259,292 | 602,161 | 516,976 | |
Greater Asia | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 242,221 | 224,703 | 485,779 | 447,523 | |
North America | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 249,054 | 230,529 | 490,199 | 449,357 | |
Latin America | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 135,893 | 128,337 | 272,805 | 257,298 | |
Flavor Compounds | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 450,540 | 414,323 | 899,559 | 820,487 | |
Consumer Fragrances | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 274,586 | 253,258 | 554,849 | 505,891 | |
Fine Fragrances | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | 97,448 | 91,432 | 195,817 | 179,199 | |
Fragrance Ingredients | |||||
Disaggregation of Revenue [Line Items] | |||||
Revenues | $ 97,442 | $ 83,848 | $ 200,719 | $ 165,577 |
Net Income Per Share - Reconcil
Net Income Per Share - Reconciliation of Shares Used in Computation of Basic and Diluted Net Income Per Share (Detail) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Earnings Per Share [Abstract] | ||||
Basic (shares) | 79,065 | 79,072 | 79,041 | 79,088 |
Assumed dilution under stock plans (shares) | 238 | 233 | 306 | 272 |
Diluted (shares) | 79,303 | 79,305 | 79,347 | 79,360 |
Net Income Per Share - Addition
Net Income Per Share - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Difference amount between basic and diluted net income per share | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 |
Net income allocated to PRS | $ 0.2 | $ 0.2 | $ 0.5 | $ 0.5 |
Employee Stock Option [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Stock excluded from computation of diluted net income per share | 0 | 0 | 0 | 0 |
Stock-Settled Appreciation Rights (SARs) [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Stock excluded from computation of diluted net income per share | 0 | 0 | 0 | 0 |
Acquisitions (Details)
Acquisitions (Details) $ / shares in Units, € in Millions | May 07, 2018USD ($)$ / sharesshares | Apr. 07, 2017USD ($) | Jan. 17, 2017EUR (€) | Jan. 17, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Business Acquisition [Line Items] | |||||||
Goodwill | $ 1,148,586,000 | $ 1,148,586,000 | $ 1,156,288,000 | ||||
Frutarom | |||||||
Business Acquisition [Line Items] | |||||||
Cash to be transferred (in dollars per share) | $ / shares | $ 71.19 | ||||||
Shares to be transferred as consideration (in shares) | shares | 0.249 | ||||||
Outstanding fully diluted IFF common stock held by former Frutarom shareholders (percent) | 15.80% | ||||||
Total consideration for acquisition | $ 7,100,000,000 | ||||||
Assumption of debt as consideration | 681,000,000 | ||||||
Expected make-whole payments for early debt payoff | $ 35,000,000 | ||||||
PhytoTechnology [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Percentage of interests acquired | 100.00% | ||||||
Payments to acquire businesses | $ 54,600,000 | ||||||
Cash acquired | 400,000 | ||||||
Contingent consideration, liability | 1,400,000 | ||||||
Contingent consideration, liability, maximum | 10,000,000 | ||||||
Purchase price exceeds preliminary fair value of net assets | 48,000,000 | ||||||
Goodwill | 15,200,000 | ||||||
Decrease in administrative expense | $ 600,000 | ||||||
PhytoTechnology [Member] | Trade names | |||||||
Business Acquisition [Line Items] | |||||||
Finite-lived intangible assets | $ 4,500,000 | ||||||
Acquired intangible assets useful life | 14 years | ||||||
PhytoTechnology [Member] | Proprietary technology | |||||||
Business Acquisition [Line Items] | |||||||
Finite-lived intangible assets | $ 27,500,000 | ||||||
Acquired intangible assets useful life | 14 years | ||||||
PhytoTechnology [Member] | Customer relationships | |||||||
Business Acquisition [Line Items] | |||||||
Finite-lived intangible assets | $ 800,000 | ||||||
Acquired intangible assets useful life | 2 years | ||||||
Fragrance Resources [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Percentage of interests acquired | 100.00% | ||||||
Payments to acquire businesses | € 143.4 | $ 151,900,000 | |||||
Cash acquired | 13.7 | 14,400,000 | |||||
Additional payment for working capital adjustment | 1.4 | 1,500,000 | |||||
Purchase price exceeds preliminary fair value of net assets | 122,000,000 | ||||||
Total consideration for acquisition | € 142 | 150,500,000 | |||||
Goodwill | 72,000,000 | ||||||
Net deferred tax liability | 15,300,000 | ||||||
Fragrance Resources [Member] | Trade Names and Proprietary Technology [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets acquired | $ 13,600,000 | ||||||
Fragrance Resources [Member] | Trade names | |||||||
Business Acquisition [Line Items] | |||||||
Acquired intangible assets useful life | 2 years | 2 years | |||||
Fragrance Resources [Member] | Proprietary technology | |||||||
Business Acquisition [Line Items] | |||||||
Acquired intangible assets useful life | 5 years | 5 years | |||||
Fragrance Resources [Member] | Customer relationships | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets acquired | $ 51,700,000 | ||||||
Minimum | Fragrance Resources [Member] | Customer relationships | |||||||
Business Acquisition [Line Items] | |||||||
Acquired intangible assets useful life | 12 years | 12 years | |||||
Maximum | Fragrance Resources [Member] | Customer relationships | |||||||
Business Acquisition [Line Items] | |||||||
Acquired intangible assets useful life | 16 years | 16 years | |||||
Senior Notes 2007 | Frutarom | |||||||
Business Acquisition [Line Items] | |||||||
Shares issued as part of merger consideration (shares) | shares | 14,880,000 | ||||||
Assumption of debt as consideration | $ 3,100,000,000 | ||||||
New securities expected to be issued | 2,200,000,000 | ||||||
Expected repurchase face amount | 250,000,000 | ||||||
Senior Unsecured Bridge Term Loan Credit Facility | Frutarom | |||||||
Business Acquisition [Line Items] | |||||||
Line of credit facility, maximum borrowing capacity | $ 5,450,000,000 |
Goodwill and Other Intangible35
Goodwill and Other Intangible Assets, Net - Schedule of Movements in Goodwill (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Goodwill [Roll Forward] | |
Balance at December 31, 2017 | $ 1,156,288 |
Acquisitions | 22 |
Foreign exchange | (7,724) |
Balance at June 30, 2018 | $ 1,148,586 |
Restructuring and Other Charg36
Restructuring and Other Charges, Net - Additional Information (Detail) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)employee | Jun. 30, 2017USD ($) | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charge | $ 1,186 | $ 791 | $ 1,903 | $ 10,934 |
2017 Productivity Program [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charge | $ 22,500 | |||
Number of positions expected to be eliminated | employee | 370 | |||
Employee Severance [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charge | 1,200 | $ 1,900 | ||
Employee Severance [Member] | 2017 Productivity Program [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Payments for restructuring | 4,500 | |||
Contract Termination [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charge | $ 3,100 | $ 13,200 | ||
Minimum | 2017 Productivity Program [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Expected restructuring costs | 30,000 | 30,000 | ||
Minimum | Employee Severance [Member] | 2017 Productivity Program [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Expected restructuring costs | 24,000 | 24,000 | ||
Minimum | Facility-Related Costs [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Expected restructuring costs | 6,000 | 6,000 | ||
Maximum | 2017 Productivity Program [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Expected restructuring costs | 35,000 | 35,000 | ||
Maximum | Employee Severance [Member] | 2017 Productivity Program [Member] | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Expected restructuring costs | $ 26,000 | $ 26,000 |
Goodwill and Other Intangible37
Goodwill and Other Intangible Assets, Net - Schedule of Other Intangible Assets, Net (Detail) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Finite-Lived Intangible Assets [Line Items] | ||
Total carrying value | $ 626,243 | $ 633,077 |
Total accumulated amortization | (234,817) | (217,290) |
Other intangible assets, net | 391,426 | 415,787 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total carrying value | 402,032 | 407,636 |
Total accumulated amortization | (116,519) | (104,800) |
Trade names & patents | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total carrying value | 38,146 | 38,771 |
Total accumulated amortization | (16,998) | (15,241) |
Technological know-how | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total carrying value | 161,331 | 161,856 |
Total accumulated amortization | (81,580) | (76,766) |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Total carrying value | 24,734 | 24,814 |
Total accumulated amortization | $ (19,720) | $ (20,483) |
Restructuring and Other Charg38
Restructuring and Other Charges, Net - Changes in Employee-Related Restructuring Liabilities (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Restructuring Reserve [Roll Forward] | ||||
Additional charges (reversals), net | $ 1,186 | $ 791 | $ 1,903 | $ 10,934 |
Fragrance Ingredients Rationalization [Member] | ||||
Restructuring Reserve [Roll Forward] | ||||
Beginning Balance | 7,957 | |||
Additional charges (reversals), net | 1,903 | |||
Payments | (4,581) | |||
Ending Balance | 5,279 | 5,279 | ||
Fragrance Ingredients Rationalization [Member] | Employee-Related Costs | ||||
Restructuring Reserve [Roll Forward] | ||||
Beginning Balance | 7,539 | |||
Additional charges (reversals), net | 1,903 | |||
Payments | (4,581) | |||
Ending Balance | 4,861 | 4,861 | ||
Fragrance Ingredients Rationalization [Member] | Other | ||||
Restructuring Reserve [Roll Forward] | ||||
Beginning Balance | 418 | |||
Additional charges (reversals), net | 0 | |||
Payments | 0 | |||
Ending Balance | $ 418 | $ 418 |
Goodwill and Other Intangible39
Goodwill and Other Intangible Assets, Net - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of acquisition-related intangibles | $ 9,584 | $ 8,494 | $ 18,769 | $ 15,561 |
Estimated annual amortization, 2018 | 36,000 | 36,000 | ||
Estimated annual amortization, 2019 | 34,600 | 34,600 | ||
Estimated annual amortization, 2020 | 33,900 | 33,900 | ||
Estimated annual amortization, 2021 | 29,000 | 29,000 | ||
Estimated annual amortization, 2022 | 25,000 | 25,000 | ||
Estimated annual amortization, 2023 | $ 24,900 | $ 24,900 |
Borrowings - Components of Debt
Borrowings - Components of Debt (Detail) - USD ($) | 6 Months Ended | ||
Jun. 30, 2018 | May 07, 2018 | Dec. 31, 2017 | |
Debt Instrument [Line Items] | |||
Total debt | $ 1,723,689,000 | $ 1,639,152,000 | |
Less: Short term borrowings | (6,500,000) | (6,966,000) | |
Total long-term debt | 1,717,189,000 | 1,632,186,000 | |
Commercial Paper | |||
Debt Instrument [Line Items] | |||
Bank overdrafts and other | 0 | ||
Senior Notes 2007 | |||
Debt Instrument [Line Items] | |||
Credit facilities | $ 249,776,000 | 249,765,000 | |
Senior Notes 2007 | Minimum | |||
Debt Instrument [Line Items] | |||
Maturities | 2,017 | ||
Senior Notes 2007 | Maximum | |||
Debt Instrument [Line Items] | |||
Maturities | 2,027 | ||
Senior Notes 2013 | |||
Debt Instrument [Line Items] | |||
Effective Interest Rate | 3.39% | ||
Credit facilities | $ 298,823,000 | 298,670,000 | |
Senior Notes 2016 | |||
Debt Instrument [Line Items] | |||
Effective Interest Rate | 1.99% | ||
Credit facilities | $ 573,514,000 | 589,848,000 | |
Senior Notes 2017 | |||
Debt Instrument [Line Items] | |||
Effective Interest Rate | 4.50% | ||
Credit facilities | $ 492,941,000 | 492,819,000 | |
Revolver Borrowings | |||
Debt Instrument [Line Items] | |||
Credit facilities | 103,988,000 | 0 | |
Bank overdrafts and other | |||
Debt Instrument [Line Items] | |||
Bank overdrafts and other | 4,590,000 | 7,993,000 | |
Deferred realized gains on interest rate swaps | |||
Debt Instrument [Line Items] | |||
Deferred realized gains on interest rate swaps | $ 57,000 | $ 57,000 | |
Frutarom | |||
Debt Instrument [Line Items] | |||
Expected make-whole payments for early debt payoff | $ 35,000,000 | ||
Frutarom | Senior Notes 2007 | |||
Debt Instrument [Line Items] | |||
Expected repurchase face amount | $ 250,000,000 |
Borrowings Narrative (Details)
Borrowings Narrative (Details) € in Millions | Jun. 06, 2018USD ($) | May 07, 2018USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 06, 2018EUR (€) | Jun. 06, 2018USD ($) | Dec. 31, 2017USD ($) |
Debt Instrument [Line Items] | |||||||||
Loss on hedging activity | $ 0 | $ (5,310,000) | |||||||
Senior Notes 2017 | |||||||||
Debt Instrument [Line Items] | |||||||||
Interest rate of senior notes (as a percentage) | 4.50% | 4.50% | |||||||
Commercial Paper | |||||||||
Debt Instrument [Line Items] | |||||||||
Commercial paper maximum term (in days) | 90 days | ||||||||
Commerical paper outstanding | $ 0 | ||||||||
Maximum outstanding during the period | $ 85,000,000 | $ 50,000,000 | |||||||
Term loan credit agreement | Loans payable | |||||||||
Debt Instrument [Line Items] | |||||||||
Term loan credit agreement, reduction to bridge loan commitments | $ 350,000,000 | ||||||||
Term of facility | 3 years | ||||||||
Amortization rate per annum | 10.00% | ||||||||
Maximum ratio of net debt to EBITDA with step-downs over time | 4.50 | ||||||||
Maximum ratio of net debt to EBITDA, temporary step-up if limitations are not met | 6 | ||||||||
Gross proceeds required to be generated on or before the closing date of the acquisition | $ 1,750,000,000 | ||||||||
Frutarom | Senior Unsecured Bridge Term Loan Credit Facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of credit facility, maximum borrowing capacity | $ 5,450,000,000 | ||||||||
Fees incurred in connection with the bridge loan commitment | $ 37,000,000 | ||||||||
Minimum | LIBOR | Term loan credit agreement | Loans payable | |||||||||
Debt Instrument [Line Items] | |||||||||
Applicable margin (percent) | 0.75% | ||||||||
Minimum | Base rate | Term loan credit agreement | Loans payable | |||||||||
Debt Instrument [Line Items] | |||||||||
Applicable margin (percent) | 0.00% | ||||||||
Maximum | LIBOR | Term loan credit agreement | Loans payable | |||||||||
Debt Instrument [Line Items] | |||||||||
Applicable margin (percent) | 2.00% | ||||||||
Maximum | Base rate | Term loan credit agreement | Loans payable | |||||||||
Debt Instrument [Line Items] | |||||||||
Applicable margin (percent) | 1.00% | ||||||||
Citibank, N.A. | Amended credit facility | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of credit facility, maximum borrowing capacity | 1,000,000,000 | ||||||||
Fees incurred in connection with the bridge loan commitment | $ 700,000 | ||||||||
Total availability under the Amended Credit Facility | 1,600,000,000 | $ 1,600,000,000 | |||||||
Outstanding borrowings | $ 0 | $ 0 | |||||||
Citibank, N.A. | Amended credit facility | Minimum | LIBOR | |||||||||
Debt Instrument [Line Items] | |||||||||
Applicable margin (percent) | 0.75% | ||||||||
Citibank, N.A. | Amended credit facility | Minimum | Base rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Applicable margin (percent) | 0.00% | ||||||||
Citibank, N.A. | Amended credit facility | Maximum | LIBOR | |||||||||
Debt Instrument [Line Items] | |||||||||
Applicable margin (percent) | 1.75% | ||||||||
Citibank, N.A. | Amended credit facility | Maximum | Base rate | |||||||||
Debt Instrument [Line Items] | |||||||||
Applicable margin (percent) | 0.75% | ||||||||
Citibank, N.A. | Tranche A | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of credit facility, maximum borrowing capacity | 585,000,000 | ||||||||
Sublimit on line of credit facility | 25,000,000 | ||||||||
Citibank, N.A. | Tranche B | |||||||||
Debt Instrument [Line Items] | |||||||||
Line of credit facility, maximum borrowing capacity | 415,000,000 | ||||||||
Sublimit on line of credit facility | € 50 | $ 25,000,000 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Income Taxes [Line Items] | ||||||
Tax Cuts and jobs act, income tax expense (benefit) | $ 139.2 | |||||
Tax Cuts and jobs act, incomplete accounting, transition tax for accumulated foreign earnings, provisional income tax expense | $ (0.6) | $ 0.6 | ||||
Spanish tax settlement | ||||||
Income Taxes [Line Items] | ||||||
Effective tax rate | 18.70% | 22.70% | 18.60% | 19.60% | ||
Foreign Tax Authority | ||||||
Income Taxes [Line Items] | ||||||
Provision for uncertain tax positions | $ 34.4 | $ 34.4 | ||||
2007-2012 | Minimum | ||||||
Income Taxes [Line Items] | ||||||
Income tax examination, years under examination | 2,008 | |||||
2007-2012 | Maximum | ||||||
Income Taxes [Line Items] | ||||||
Income tax examination, years under examination | 2,017 | |||||
Other Liabilities | ||||||
Income Taxes [Line Items] | ||||||
Unrecognized tax benefits that would impact effective tax rate | 30.6 | $ 30.6 | ||||
Accrued interest and penalties | 2.5 | 2.5 | ||||
Other Current Liabilities | ||||||
Income Taxes [Line Items] | ||||||
Unrecognized tax benefits that would impact effective tax rate | 1 | 1 | ||||
Accrued interest and penalties | $ 0.1 | $ 0.1 |
Stock Compensation Plans - Stoc
Stock Compensation Plans - Stock-Based Compensation Expense and Related Tax Benefits (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 7,796 | $ 8,372 | $ 15,569 | $ 15,944 |
Less: Tax benefit | (1,335) | (2,336) | (2,897) | (4,549) |
Total stock-based compensation expense, after tax | 6,461 | 6,036 | 12,672 | 11,395 |
Equity-based awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | 7,554 | 7,074 | 15,173 | 12,893 |
Liability-based awards | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation expense | $ 242 | $ 1,298 | $ 396 | $ 3,051 |
Segment Information - Additiona
Segment Information - Additional Information (Detail) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Jun. 30, 2018USD ($)segment | Jun. 30, 2017USD ($) | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Number of segments | segment | 2 | |||||
Revenues | $ 920,016 | $ 842,861 | $ 1,850,944 | $ 1,671,154 | ||
Net sales related to the U.S. | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Revenues | $ 234,118 | $ 243,815 | 464,521 | 449,325 | ||
Net sales attributed to all foreign countries | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Revenues | $ 685,898 | $ 599,046 | $ 1,386,423 | $ 1,221,829 | ||
Net sales attributed to all foreign countries | Sales | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Maximum percentage of total consolidated net sales attributed to any non-U.S. country | 6.00% |
Segment Information - Reportabl
Segment Information - Reportable Segment Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net sales: | ||||
Net sales | $ 920,016 | $ 842,861 | $ 1,850,944 | $ 1,671,154 |
Segment profit: | ||||
Restructuring and other charges, net | (1,186) | (791) | (1,903) | (10,934) |
Gain on sales of fixed assets | (1,264) | 68 | (1,195) | 89 |
Operating profit | 154,509 | 151,687 | 329,363 | 281,750 |
Interest expense | (53,246) | (17,556) | (69,841) | (30,363) |
Other income, net | 20,655 | 7,909 | 21,232 | 29,140 |
Income before taxes | 121,918 | 142,040 | 280,754 | 280,527 |
Flavor Compounds | ||||
Net sales: | ||||
Net sales | 450,540 | 414,323 | 899,559 | 820,487 |
Segment profit: | ||||
Operating profit | 109,605 | 96,840 | 221,169 | 191,395 |
Fragrances [Member] | ||||
Net sales: | ||||
Net sales | 469,476 | 428,538 | 951,385 | 850,667 |
Segment profit: | ||||
Operating profit | 80,780 | 80,993 | 174,056 | 158,867 |
Global expenses [Member] | ||||
Segment profit: | ||||
Operating profit | (20,572) | (13,488) | (44,398) | (29,781) |
Corporate and Other [Member] | ||||
Segment profit: | ||||
Restructuring and other charges, net | (403) | (445) | (1,429) | (1,066) |
Operational improvement initiative costs | (993) | (731) | (993) | (1,923) |
Legal Charges/Credits, net | 0 | (1,000) | 0 | (1,000) |
Gain on sales of fixed assets | 0 | 19 | 0 | (5,331) |
Tax assessment | (193) | (791) | (910) | (10,934) |
Integration-related costs | (1,264) | 68 | (1,195) | 89 |
FDA mandated product recall | 0 | (3,500) | (5,000) | (3,500) |
Acquisition Related Costs | Corporate and Other [Member] | ||||
Segment profit: | ||||
Acquisition and related costs | 4 | (6,278) | 518 | (15,066) |
Frutarom Acquisition Related Costs | Corporate and Other [Member] | ||||
Segment profit: | ||||
Acquisition and related costs | $ (12,455) | $ 0 | $ (12,455) | $ 0 |
Segment Information Segment Inf
Segment Information Segment Information - Net Sales by Destination of Product Delivery (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Net sales | $ 920,016 | $ 842,861 | $ 1,850,944 | $ 1,671,154 | ||
Net sales related to the U.S. | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Net sales | $ 234,118 | $ 243,815 | 464,521 | 449,325 | ||
Net sales attributed to all foreign countries | ||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||||
Net sales | $ 685,898 | $ 599,046 | $ 1,386,423 | $ 1,221,829 |
Employee Benefits - Pension and
Employee Benefits - Pension and Other Defined Contribution Retirement Plan Expenses (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Pension Plans [Member] | U.S. Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost for benefits earned | $ 596 | $ 698 | $ 1,192 | $ 1,395 |
Interest cost on projected benefit obligation | 4,790 | 4,561 | 9,580 | 9,122 |
Expected return on plan assets | (7,740) | (9,246) | (15,479) | (18,492) |
Net amortization and deferrals | 1,549 | 1,793 | 3,098 | 3,585 |
Net periodic benefit income | (805) | (2,194) | (1,609) | (4,390) |
Total expense | 2,276 | 330 | 4,162 | 389 |
Pension Plans [Member] | Non-U.S. Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Service cost for benefits earned | 4,470 | 5,610 | 8,939 | 11,220 |
Interest cost on projected benefit obligation | 4,338 | 3,911 | 8,675 | 7,822 |
Expected return on plan assets | (12,032) | (12,334) | (24,064) | (24,668) |
Net amortization and deferrals | 2,972 | 3,988 | 5,943 | 7,977 |
Net periodic benefit income | (252) | 1,175 | (507) | 2,351 |
Total expense | 1,454 | 2,791 | 2,751 | 5,264 |
Defined Contribution and Other Retirement Plans [Member] | U.S. Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Defined contribution and other retirement plans | 3,081 | 2,524 | 5,771 | 4,779 |
Defined Contribution and Other Retirement Plans [Member] | Non-U.S. Plans | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Defined contribution and other retirement plans | $ 1,706 | $ 1,616 | $ 3,258 | $ 2,913 |
Employee Benefits - Additional
Employee Benefits - Additional Information (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Defined Benefit Plan Disclosure [Line Items] | ||||
Contribution to the plans | $ 1,500,000 | $ 2,400,000 | ||
Other income, net | 20,655,000 | $ 7,909,000 | 21,232,000 | $ 29,140,000 |
Cost of goods sold | 521,299,000 | 469,877,000 | 1,046,419,000 | 935,088,000 |
Research and development expenses | 74,767,000 | 72,761,000 | 153,244,000 | 144,887,000 |
Selling and administrative expenses | 157,407,000 | 139,319,000 | 300,051,000 | 283,023,000 |
Increase in operating expenses | (6,700,000) | (7,400,000) | (13,300,000) | (14,900,000) |
Defined Contribution and Other Retirement Plans [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Expected contribution to the plan | 5,000,000 | |||
U.S. Plans | Pension Plans [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Contribution to the plans | 0 | |||
U.S. Plans | Minimum | Pension Plans [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Expected contribution to the plan | 4,100,000 | 4,100,000 | ||
Non-U.S. Plans | Pension Plans [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Contribution to the plans | 7,800,000 | |||
Benefit payments | 2,200,000 | |||
Non-U.S. Plans | Minimum | Pension Plans [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Expected contribution to the plan | $ 17,100,000 | $ 17,100,000 | ||
Accounting Standards Update 2017-07 [Member] | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Cost of goods sold | 1,600,000 | 3,200,000 | ||
Research and development expenses | 2,400,000 | 4,900,000 | ||
Selling and administrative expenses | $ 3,400,000 | $ 6,800,000 |
Financial Instruments - Carryin
Financial Instruments - Carrying Amount and Estimated Fair Values of Financial Instruments (Detail) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 | Dec. 31, 2016 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Cash and cash equivalents | $ 322,423 | $ 368,046 | $ 491,386 | $ 323,992 | |
Estimate of Fair Value Measurement [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Cash and cash equivalents | 322,423 | 368,046 | |||
Credit facilities and bank overdrafts | [1] | 115,078 | 7,993 | ||
Estimate of Fair Value Measurement [Member] | Senior Notes 2007 | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Senior Notes, Noncurrent | [2] | 278,720 | 293,232 | ||
Estimate of Fair Value Measurement [Member] | Senior Notes 2013 | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Senior Notes, Noncurrent | [2] | 294,645 | 304,219 | ||
Estimate of Fair Value Measurement [Member] | Senior Notes 2016 | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Senior Notes, Noncurrent | [2] | 599,111 | 627,782 | ||
Estimate of Fair Value Measurement [Member] | Senior Notes 2017 | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Senior Notes, Noncurrent | [2] | 452,689 | 525,906 | ||
Reported Value Measurement [Member] | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Credit facilities and bank overdrafts | [1] | 115,078 | 7,993 | ||
Reported Value Measurement [Member] | Senior Notes 2007 | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Senior Notes, Noncurrent | [2] | 250,000 | 250,000 | ||
Reported Value Measurement [Member] | Senior Notes 2013 | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Senior Notes, Noncurrent | [2] | 300,000 | 300,000 | ||
Reported Value Measurement [Member] | Senior Notes 2016 | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Senior Notes, Noncurrent | [2] | 577,700 | 594,400 | ||
Reported Value Measurement [Member] | Senior Notes 2017 | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Senior Notes, Noncurrent | [2] | $ 500,000 | $ 500,000 | ||
[1] | 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. | ||||
[2] | The fair value of the Company's long-term debt was calculated using discounted cash flows applying current interest rates and current credit spreads based on its own credit risk. |
Financial Instruments - Additio
Financial Instruments - Additional Information (Detail) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018USD ($)contract | Jun. 30, 2018USD ($)contract | Jun. 30, 2017swap | |
Derivative [Line Items] | |||
Derivative losses included in AOCI | $ 2,400,000 | ||
Net investment hedge ineffectiveness | $ 0 | ||
Cash flow hedge ineffectiveness | 0 | $ 0 | |
Foreign currency contract | |||
Derivative [Line Items] | |||
Term of derivative | 12 months | ||
Interest rate swaps | |||
Derivative [Line Items] | |||
Number of instruments terminated (swap) | swap | 2 | ||
Foreign currency contract and two interest rate swap agreements | |||
Derivative [Line Items] | |||
Notional amount | 1,900,000,000 | $ 1,900,000,000 | |
Pre-tax gain included in Other income, net | 11,000,000 | ||
Pre-tax loss included in Interest expense | $ 25,000,000 | ||
Net Investment Hedging [Member] | Designated as Hedging Instrument [Member] | Foreign currency contract | |||
Derivative [Line Items] | |||
Number of derivatives matured (contract) | contract | 4 | 4 |
Financial Instruments - Derivat
Financial Instruments - Derivative Instruments Notional Amount Outstanding (Detail) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Non-Deal Contingent Swaps | Foreign currency contracts | ||
Schedule Of Information By Major Category Of Credit Derivatives Contracts [Line Items] | ||
Derivative instruments outstanding | $ 531,092 | $ 896,947 |
Non-Deal Contingent Swaps | Interest rate swaps | ||
Schedule Of Information By Major Category Of Credit Derivatives Contracts [Line Items] | ||
Derivative instruments outstanding | 150,000 | 150,000 |
Deal Contingent Swaps | Foreign currency contracts | ||
Schedule Of Information By Major Category Of Credit Derivatives Contracts [Line Items] | ||
Derivative instruments outstanding | 1,000,000 | 0 |
Deal Contingent Swaps | Interest rate swaps | ||
Schedule Of Information By Major Category Of Credit Derivatives Contracts [Line Items] | ||
Derivative instruments outstanding | $ 898,513 | $ 0 |
Financial Instruments - Deriv52
Financial Instruments - Derivative Instruments Measured at Fair Value (Detail) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | |
Derivatives, Fair Value [Line Items] | |||
Total Fair Value, Derivative Liabilities | [1] | $ 34,887 | $ 13,555 |
Foreign currency contracts | |||
Derivatives, Fair Value [Line Items] | |||
Total Fair Value, Derivative Assets | [2] | 22,697 | 5,137 |
Total Fair Value, Derivative Liabilities | [1] | 6,151 | 12,186 |
Interest rate swaps | |||
Derivatives, Fair Value [Line Items] | |||
Total Fair Value, Derivative Liabilities | 28,736 | 1,369 | |
Fair Value of Derivatives Designated as Hedging Instruments [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Total Fair Value, Derivative Liabilities | [1] | 4,049 | 9,211 |
Fair Value of Derivatives Designated as Hedging Instruments [Member] | Foreign currency contracts | |||
Derivatives, Fair Value [Line Items] | |||
Total Fair Value, Derivative Assets | [2] | 5,525 | 1,159 |
Total Fair Value, Derivative Liabilities | [1] | 250 | 7,842 |
Fair Value of Derivatives Designated as Hedging Instruments [Member] | Interest rate swaps | |||
Derivatives, Fair Value [Line Items] | |||
Total Fair Value, Derivative Liabilities | 3,799 | 1,369 | |
Fair Value of Derivatives Not Designated as Hedging Instruments [Member] | |||
Derivatives, Fair Value [Line Items] | |||
Total Fair Value, Derivative Liabilities | [1] | 30,838 | 4,344 |
Fair Value of Derivatives Not Designated as Hedging Instruments [Member] | Foreign currency contracts | |||
Derivatives, Fair Value [Line Items] | |||
Total Fair Value, Derivative Assets | [2] | 17,172 | 3,978 |
Total Fair Value, Derivative Liabilities | [1] | 5,901 | $ 4,344 |
Fair Value of Derivatives Not Designated as Hedging Instruments [Member] | Interest rate swaps | |||
Derivatives, Fair Value [Line Items] | |||
Total Fair Value, Derivative Liabilities | [1] | $ 24,937 | |
[1] | {F|ahBzfndlYmZpbGluZ3MtaHJkcmoLEgZYTUxEb2MiXlhCUkxEb2NHZW5JbmZvOjM0MzI0YTZjZGNkZjRmYzA5N2FkMzA0M2QwMjBhZDQ3fFRleHRTZWxlY3Rpb246OTBBMjU0MUNGMTJENTMzQ0ExMjBDMjIxOUUzRUZEMjYM} | ||
[2] | {F|ahBzfndlYmZpbGluZ3MtaHJkcmoLEgZYTUxEb2MiXlhCUkxEb2NHZW5JbmZvOjM0MzI0YTZjZGNkZjRmYzA5N2FkMzA0M2QwMjBhZDQ3fFRleHRTZWxlY3Rpb246QUJEM0VCOEVDRTY4NTIwRDkzNERFNDY5NkVBNjBDMzAM} |
Financial Instruments - Deriv53
Financial Instruments - Derivative Instruments Which Were Not Designated as Hedging Instruments (Detail) - Not Designated as Hedging Instrument [Member] - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Foreign currency contracts | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (Loss) Gain Recognized in Income on Derivative | $ (9,273) | $ (3,054) | $ (12,888) | $ (13,181) |
Non-Deal Contingent Swaps | Foreign currency contracts | Other income (expense), net [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (Loss) Gain Recognized in Income on Derivative | 4,685 | (3,054) | 1,070 | (13,181) |
Deal Contingent Swaps | Foreign currency contracts | Other income (expense), net [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (Loss) Gain Recognized in Income on Derivative | 10,979 | 0 | 10,979 | 0 |
Deal Contingent Swaps | Interest rate swaps | Interest expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of (Loss) Gain Recognized in Income on Derivative | $ (24,937) | $ 0 | $ (24,937) | $ 0 |
Financial Instruments - Deriv54
Financial Instruments - Derivative Instruments Designated as Cash Flow and Net Investment Hedging Instruments (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | ||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Amount of (Loss) Gain Recognized in OCI on Derivative (Effective Portion) | $ 39,317 | $ (33,629) | $ 22,117 | $ (47,836) | |||
Amount of (Loss) Gain Reclassified from Accumulated OCI into Income (Effective Portion) | (2,546) | 1,603 | (4,955) | 1,890 | |||
Foreign currency contracts | Derivatives in Cash Flow Hedging Relationships [Member] | |||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Amount of (Loss) Gain Recognized in OCI on Derivative (Effective Portion) | 10,241 | (6,328) | 9,498 | (9,276) | |||
Foreign currency contracts | Derivatives in Net Investment Hedging Relationships [Member] | |||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Amount of (Loss) Gain Recognized in OCI on Derivative (Effective Portion) | 178 | (2,082) | (518) | (3,128) | |||
Foreign currency contracts | Cost of goods sold [Member] | Derivatives in Cash Flow Hedging Relationships [Member] | |||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Amount of (Loss) Gain Reclassified from Accumulated OCI into Income (Effective Portion) | (2,330) | 1,789 | (4,523) | 2,247 | |||
Interest rate swaps | Derivatives in Cash Flow Hedging Relationships [Member] | |||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Amount of (Loss) Gain Recognized in OCI on Derivative (Effective Portion) | 216 | [1] | (5,439) | [1] | 432 | (4,243) | |
Interest rate swaps | Interest expense | Derivatives in Cash Flow Hedging Relationships [Member] | |||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Amount of (Loss) Gain Reclassified from Accumulated OCI into Income (Effective Portion) | [1] | (216) | (186) | (432) | (357) | ||
Senior Notes 2016 | Derivatives in Net Investment Hedging Relationships [Member] | |||||||
Derivative Instruments, Gain (Loss) [Line Items] | |||||||
Amount of (Loss) Gain Recognized in OCI on Derivative (Effective Portion) | $ 28,682 | $ (19,780) | $ 12,705 | $ (31,189) | |||
[1] | {F|ahBzfndlYmZpbGluZ3MtaHJkcmoLEgZYTUxEb2MiXlhCUkxEb2NHZW5JbmZvOjM0MzI0YTZjZGNkZjRmYzA5N2FkMzA0M2QwMjBhZDQ3fFRleHRTZWxlY3Rpb246OUNDMEQxQUQ3REI1NUE5OUI0NEM0NTUyNjk2ODAyRkYM} |
Accumulated Other Comprehensi55
Accumulated Other Comprehensive Income (Loss) - Schedule of Changes in Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated other comprehensive loss (income), net of tax, beginning balance | $ (637,482) | $ (680,095) | ||
OCI before reclassifications | (65,304) | 10,675 | ||
Amounts reclassified from AOCI | 10,288 | (6,781) | ||
Net current period other comprehensive income (loss) | $ (71,919) | $ 5,267 | (55,016) | 3,894 |
Accumulated other comprehensive loss (income), net of tax, ending balance | (692,498) | (676,201) | (692,498) | (676,201) |
Accumulated Translation Adjustment [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated other comprehensive loss (income), net of tax, beginning balance | (297,416) | (352,025) | ||
OCI before reclassifications | (70,461) | 22,304 | ||
Amounts reclassified from AOCI | 0 | (12,214) | ||
Net current period other comprehensive income (loss) | (70,461) | 10,090 | ||
Accumulated other comprehensive loss (income), net of tax, ending balance | (367,877) | (341,935) | (367,877) | (341,935) |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated other comprehensive loss (income), net of tax, beginning balance | (10,332) | 7,604 | ||
OCI before reclassifications | 4,971 | (11,629) | ||
Amounts reclassified from AOCI | 4,955 | (1,890) | ||
Net current period other comprehensive income (loss) | 9,926 | (13,519) | ||
Accumulated other comprehensive loss (income), net of tax, ending balance | (406) | (5,915) | (406) | (5,915) |
Accumulated Defined Benefit Plans Adjustment [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ||||
Accumulated other comprehensive loss (income), net of tax, beginning balance | (329,734) | (335,674) | ||
OCI before reclassifications | 186 | 0 | ||
Amounts reclassified from AOCI | 5,333 | 7,323 | ||
Net current period other comprehensive income (loss) | 5,519 | 7,323 | ||
Accumulated other comprehensive loss (income), net of tax, ending balance | $ (324,215) | $ (328,351) | $ (324,215) | $ (328,351) |
Accumulated Other Comprehensi56
Accumulated Other Comprehensive Income (Loss) - Reclassifications of Accumulated Other Comprehensive Income to Consolidated Statement of Comprehensive Income (Detail) - USD ($) $ in Thousands | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | ||
Schedule Of Reclassification Of Accumulated Other Comprehensive Income Loss [Line Items] | |||
(Losses) gains on derivatives qualifying as hedges, net of tax | $ (4,955) | $ 1,890 | |
Prior service cost | [1] | 3,543 | 3,512 |
Actuarial losses | [1] | (10,206) | (12,982) |
(Losses) gains on pension and postretirement liability adjustments | (5,333) | (7,323) | |
Cost of goods sold [Member] | Foreign currency contracts [Member] | |||
Schedule Of Reclassification Of Accumulated Other Comprehensive Income Loss [Line Items] | |||
(Losses) gains on derivatives qualifying as hedges | (5,169) | 2,568 | |
Interest expense | Interest rate swaps | |||
Schedule Of Reclassification Of Accumulated Other Comprehensive Income Loss [Line Items] | |||
(Losses) gains on derivatives qualifying as hedges | (432) | (357) | |
Provision for income taxes [Member] | |||
Schedule Of Reclassification Of Accumulated Other Comprehensive Income Loss [Line Items] | |||
Provision for income taxes for (Losses) gains on derivatives qualifying as hedges | 646 | (321) | |
Provision for income taxes for gains (Losses) on pension and postretirement liability adjustments | $ 1,330 | $ 2,147 | |
[1] | of our 2017 Form 10-K for additional information regarding net periodic benefit cost. |
Commitments and Contingencies -
Commitments and Contingencies - Additional Information (Detail) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Aug. 07, 2018USD ($) | Jun. 30, 2018USD ($)Facility | Dec. 31, 2017USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)Facilityproperty | |
Commitments And Contingencies [Line Items] | |||||
Bank guarantees related to appeals on income tax and indirect tax cases | $ 13,500,000 | ||||
Available lines of credit | $ 102,300,000 | $ 102,300,000 | |||
Duration as potentially responsible party, years | 20 years | ||||
Number of facilities under potentially responsible party investigation | property | 8 | ||||
Property, Plant and Equipment, Net | 867,629,000 | $ 880,580,000 | $ 867,629,000 | ||
Bank guarantees and pledged assets to pursue defenses related to other contingencies | 24,700,000 | ||||
Additional litigation reserve | $ 1,000,000 | ||||
Product liability | 5,000,000 | ||||
Settlement of claim | 3,000,000 | 16,000,000 | |||
Product Liability Contingency, Loss Exposure in Excess of Accrual, Amount Paid | 13,000,000 | ||||
Product Liability Contingency, Loss Exposure in Excess of Accrual, Best Estimate | 1,500,000 | ||||
Bank guarantees and standby letters of credit [Member] | |||||
Commitments And Contingencies [Line Items] | |||||
Bank guarantees and letters of credit outstanding | 49,400,000 | ||||
Pledged assets [Member] | |||||
Commitments And Contingencies [Line Items] | |||||
The amount of pledged assets, principally PP&E to cover income tax and indirect tax assessments | 11,200,000 | ||||
Reserve for Environmental Costs [Member] | |||||
Commitments And Contingencies [Line Items] | |||||
Estimation of possible loss | 5,000,000 | 5,000,000 | |||
Damages from Product Defects [Member] | |||||
Commitments And Contingencies [Line Items] | |||||
Additional litigation reserve | 17,500,000 | 17,500,000 | |||
CHINA | |||||
Commitments And Contingencies [Line Items] | |||||
Property, Plant and Equipment, Net | $ 161,000,000 | $ 161,000,000 | |||
Number of facilities | Facility | 5 | 5 | |||
Number of facilities under construction | Facility | 1 | 1 | |||
Guangzhou Flavors Plant [Member] | CHINA | |||||
Commitments And Contingencies [Line Items] | |||||
Property, Plant and Equipment, Net | $ 71,000,000 | $ 71,000,000 | |||
Zhejiang Ingredients Plant [Member] | |||||
Commitments And Contingencies [Line Items] | |||||
Gain Contingency, Expected Relocation Payments | 50,000,000 | ||||
Gain Contingency, Relocation Payments Received | 0 | 15,000,000 | |||
Zhejiang Ingredients Plant [Member] | CHINA | |||||
Commitments And Contingencies [Line Items] | |||||
Property, Plant and Equipment, Net | $ 23,000,000 | $ 23,000,000 | |||
Minimum | |||||
Commitments And Contingencies [Line Items] | |||||
Estimation of possible loss | 0 | ||||
Maximum | |||||
Commitments And Contingencies [Line Items] | |||||
Estimation of possible loss | $ 12,000,000 | ||||
ZoomEssence [Member] | |||||
Commitments And Contingencies [Line Items] | |||||
Payments for legal settlements | $ 56,000,000 | ||||
Subsequent Event | |||||
Commitments And Contingencies [Line Items] | |||||
Reimbursement to supplier | $ 9,800,000 |