SEGMENT INFORMATION

The Company is organized into three reportable operating segments, Taste (previously "Flavors"), Scent (previously "Fragrances") and Frutarom; these segments align with the internal structure used to manage these businesses. Frutarom became a separate segment upon the acquisition of the company on October 4, 2018.

Taste is comprised of Flavor Compounds which are sold to the food and beverage industries for use in consumer products such as prepared foods, beverages, dairy, food and sweet products.

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

Frutarom creates and manufactures a naturals-focused suite of flavor compounds, functional foods and specialty fine ingredients, largely targeting small, local and regional customers. Frutarom’s products are focused on three principal areas: (1) Savory Solutions, (2) Natural Product Solutions, which includes natural health ingredients, natural color and natural food protection, and (3) Taste Solutions.

The Company's Chief Operating Decision Maker evaluates the performance of these reportable operating segments based on segment profit which is defined as operating profit before restructuring, global expenses (as discussed below) and certain non-recurring items, Interest expense, Other income (expense), net and Taxes on income.

The Global expenses caption represents corporate and headquarter-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 reportable operating segments. Global assets are principally cash and cash equivalents and other corporate and headquarter-related assets.

Reportable segment information is as follows:



	December 31,
(DOLLARS IN THOUSANDS)	2018		2017		2016
Net sales
Taste	$	1,737,349	$	1,632,166	$	1,496,525
Scent	1,880,630		1,766,553		1,619,825
Frutarom	$	359,560	$	—	$	—
Consolidated	$	3,977,539	$	3,398,719	$	3,116,350



	December 31,
(DOLLARS IN THOUSANDS)	2018		2017
Segment assets
Taste	$	2,024,573	$	1,929,005
Scent	2,340,131		2,284,309
Frutarom	7,961,538		—
Global assets	563,153		385,612
Consolidated	$	12,889,395	$	4,598,926



	December 31,
(DOLLARS IN THOUSANDS)	2018			2017			2016
Segment profit:
Taste	$	395,190		$	360,483		$	330,221
Scent	329,548			318,954			326,705
Frutarom	27,358			—			—
Global expenses	(74,730		)	(60,810		)	(48,352		)
Operational Improvement Initiatives (a)	(2,169		)	(1,802		)	(2,402		)
Acquisition Related Costs (b)	1,289			(20,389		)	(12,195		)
Integration Related Costs (c)	(7,188		)	(4,179		)	—
Legal Charges/Credits, net (d)	—			(1,000		)	(48,518		)
Tax Assessment (e)	—			(5,331		)	—
Restructuring and Other Charges, net (f)	(4,086		)	(19,711		)	(322		)
Gain on Sale of Assets	1,177			184			7,818
FDA Mandated Product Recall (g)	7,125			(11,000		)	—
UK Pension Settlement Charges (h)	—			(2,769		)	—
Frutarom Acquisition Related Costs (i)	(89,632		)	—			—
Operating Profit	583,882			552,630			552,955
Interest expense	(132,558		)	(65,363		)	(52,989		)
Loss on extinguishment of debt	(38,810		)	—			—
Other income (expense), net	35,243			49,778			23,751
Income before taxes	$	447,757		$	537,045		$	523,717
Profit margin
Taste	22.7		%	22.1		%	22.1		%
Scent	17.5		%	18.1		%	20.2		%
Frutarom	7.6		%	—		%	—		%
Consolidated	14.7		%	16.3		%	17.7		%



(a)	For 2018, represents accelerated depreciation related to a plant relocation in India and Taiwan asset write off. 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" included in Cost of goods sold and transaction costs related to the acquisitions of Fragrance Resources and PowderPure within Selling and administrative expenses.
(c)	For 2018, represents costs related to the integration of the Frutarom acquisition. For 2017, represents costs related to the integration of the 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)	For 2018, represents severance costs related to the 2017 Productivity Program and costs associated with the termination of agent relationships in a subsidiary. For 2017, represents severance costs related to the 2017 Productivity Program.
(g)	For 2018, principally represents recoveries from the supplier for the third and fourth quarter, partially offset by final payments to the customer made for the effected product in the first quarter. For 2017, represents management's best estimate of losses related to the previously disclosed FDA mandated recall.
(h)	Represents pension settlement charges incurred in one of the Company's UK pension plans.
(i)	Represents transaction-related costs and expenses related to the acquisition of Frutarom. Amount primarily includes $23.5 million of amortization for inventory "step-up" costs, $39.4 million of bridge loan commitment fees included in Interest expense; $34.9 million make whole payment on the Senior Notes - 2007 and $3.9 million realized loss on a fair value hedge included in Loss on extinguishment of debt; $12.5 million realized gain on a foreign currency derivative included in Other income; and $66.0 million of transaction costs included in Selling and administrative expenses.

The Company has not disclosed revenues at a lower level than provided herein, such as revenues from external customers by product, as it is impracticable for it to do so.

The Company had no customers that accounted for greater than 10% of consolidated net sales in 2018. The Company had one customer that accounted for greater than 10% of consolidated net sales in each year for 2017 and 2016. The Company's largest customer had net sales of $356.8 million, $358.5 million and $364.8 million in 2018, 2017 and 2016, respectively. The majority of these sales were in the Scent reportable operating segment.

Total long-lived assets consist of net property, plant and equipment and amounted to $1,241.2 million and $880.6 million at December 31, 2018 and 2017, respectively. Of this total, $315.3 million and $219.1 million were located in the United States at December 31, 2018 and 2017, respectively, $104.0 million and $113.7 million were located in the Netherlands at December 31, 2018 and 2017, respectively, $74.0 million and $77.9 million were located in Singapore at December 31, 2018 and 2017, respectively, and $178.6 million and $135.8 million were located in China at December 31, 2018 and 2017, respectively.



	Capital Expenditures						Depreciation and Amortization
(DOLLARS IN THOUSANDS)	2018		2017		2016		2018		2017		2016
Taste	$	70,028	$	68,937	$	47,064	$	72,474	$	53,534	$	47,705
Scent	82,206		53,089		73,345		85,078		59,951		50,724
Frutarom	12,878		—		—		8,738		—		—
Unallocated assets	4,982		6,947		6,003		7,502		4,482		4,040
Consolidated	$	170,094	$	128,973	$	126,412	$	173,792	$	117,967	$	102,469



	Net Sales by Geographic Area
(DOLLARS IN THOUSANDS)	2018		2017		2016
Europe, Africa and Middle East	$	1,396,316	$	1,065,596	$	964,931
Greater Asia	991,015		903,546		880,040
North America	1,010,126		901,821		769,081
Latin America	580,082		527,756		502,298
Consolidated	$	3,977,539	$	3,398,719	$	3,116,350

Net sales are attributed to individual regions based upon the destination of product delivery. Net sales related to the U.S. for the years ended December 31, 2018, 2017 and 2016 were $952.6 million, $864.1 million and $735.3 million, respectively. Net sales attributed to all foreign countries in total for the years ended December 31, 2018, 2017 and 2016 were $3.0 billion, $2.5 billion and $2.4 billion, respectively. No non-U.S. country had net sales in any period presented greater than 6% of total consolidated net sales.