NET INCOME PER SHARE

Basic and diluted net income per share is based on the weighted average number of shares outstanding. A reconciliation of shares used in the computation of basic and diluted net income per share is as follows:



(DOLLARS IN THOUSANDS)	2018			2017		2016
Net Income
Net income attributable to IFF stockholders	$	337,302		$	295,665	$	405,031
Less: Increase in redemption value of redeemable noncontrolling interests in excess of earnings allocated	(2,848		)	—		—
Net income available to IFF stockholders	$	334,454		$	295,665	$	405,031
Shares
Weighted average common shares outstanding (basic)⁽¹⁾	87,551			79,070		79,648
Adjustment for assumed dilution⁽²⁾:
Stock options and restricted stock awards	303			300		333
SPC portion of the TEUs	267			—		—
Weighted average shares assuming dilution (diluted)	88,121			79,370		79,981
Net Income per Share
Net income per share - basic	$	3.81		$	3.73	$	5.07
Net income per share - dilutive	3.79			3.72		5.05

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(1)	For the twelve months ended December 31, 2018, the TEUs were assumed to be outstanding at the minimum settlement amount for weighted-average shares for basic earnings per share. See below for details.


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

On September 17, 2018, the Company issued and sold 12,667,947 shares of its common stock in an underwritten public offering for net proceeds of approximately $1.6 billion. Additionally, as part of the merger consideration for the acquisition of Frutarom, the Company issued 14,901,445 shares using an exchange ratio of 0.2490 of a share of the Company’s common stock for each ordinary share of Frutarom issued and outstanding at closing. This issuance resulted in former Frutarom shareholders holding approximately 14% of the Company's outstanding common stock as of the closing on October 4, 2018.

As discussed in Note 9, the Company issued 16,500,000 TEUs, consisting of a prepaid SPC and a senior amortizing note, for net proceeds of approximately $800.2 million on September 17, 2018. For the periods outstanding, the SPC portion of the TEUs were assumed to be settled at the minimum settlement amount of 0.3134 shares per SPC for weighted-average shares for basic earnings per share. For diluted earnings per share, the shares were assumed to be settled at a conversion factor based on the 20 day volume-weighted average price (“VWAP”) per share of the Company’s common stock not to exceed 0.3711 shares per SPC.

The Company has issued shares of Purchased Restricted Stock ("PRS") and Purchased Restricted Stock Units (“PRSUs”) which contain nonforfeitable rights to dividends and thus are considered participating securities which are required to be included in the computation of basic and diluted earnings per share pursuant to the two-class method. The two-class method was not presented since the difference between basic and diluted net income per share for both common shareholders, PRS and PRSU holders was less than $0.02 per share for each year and the number of PRS and PRSUs outstanding as of December 31, 2018, 2017 and 2016 was immaterial. Net income allocated to such PRS and PRSUs during 2018, 2017 and 2016 was approximately $1.0 million, $1.0 million and $1.0 million, respectively.

An immaterial amount of Stock-Settled Appreciation Rights (“SSARs”) were excluded from the computation of diluted net income per share at December 31, 2018, 2017 and 2016.