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 March 31,
(DOLLARS IN THOUSANDS)	2018			2017
Net sales:
Flavors	$	449,019		$	406,164
Fragrances	481,909			422,129
Consolidated	$	930,928		$	828,293
Segment profit:
Flavors	$	111,564		$	94,556
Fragrances	93,277			77,875
Global expenses	(23,825		)	(16,293		)
Operational Improvement Initiatives (a)	(1,026		)	(621		)
Acquisition Related Costs (b)	514			(8,788		)
Integration Related Costs (c)	—			(1,192		)
Tax Assessment (d)	—			(5,350		)
Restructuring and Other Charges, net (e)	(717		)	(10,143		)
Gain on Sale of Assets	69			21
FDA Mandated Product Recall (f)	(5,000		)	—
Operating profit	174,856			130,065
Interest expense	(16,595		)	(12,807		)
Other income (expense)	576			21,229
Income before taxes	$	158,837		$	138,487



(a)	For 2018, represents accelerated depreciation related to a plant relocation in India and a lab closure in Taiwan. 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 and Fragrance Resources, 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)	Represents costs related to the integration of the David Michael and Fragrance Resources acquisitions.
(d)	Represents the reserve for payment of a tax assessment related to commercial rent for prior periods.
(e)	Represents severance costs related to the 2017 Productivity Program and Taiwan lab closure.
(f)	Represents management's best estimate of losses related to the previously disclosed FDA mandated recall.

Net sales are attributed to individual regions based upon the destination of product delivery. Net sales related to the U.S. for the three months ended March 31, 2018 and 2017 were $230.2 million and $227.6 million, respectively. Net sales attributed to all foreign countries in total for the three months ended March 31, 2018 and 2017 were $700.7 million and $600.7 million, respectively. No country other than the U.S. had net sales in any period presented greater than 6% of total consolidated net sales.