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.