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Segment Information
 9 Months Ended
Sep. 30, 2019
Segment Reporting [Abstract]  
Segment Information SEGMENT INFORMATION
The Company is currently organized into three reportable operating segments, Taste, Scent and Frutarom; these segments align with the internal structure used to manage these businesses.
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 the following principal areas: Taste, Savory Solutions, Inclusions, Fine Ingredients, and Natural Product 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.
Reportable segment information was as follows:
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
(DOLLARS IN THOUSANDS)
2019
 
2018
 
2019
 
2018
Net sales:
 
 
 
 
 
 
 
Taste
$
423,269

 
$
436,214

 
$
1,302,050

 
$
1,335,773

Scent
480,384

 
471,334

 
1,444,407

 
1,422,719

Frutarom
363,692

 
—

 
1,109,858

 
—

Consolidated
$
1,267,345

 
$
907,548

 
$
3,856,315

 
$
2,758,492

Segment profit:
 
 
 
 
 
 
 
Taste
$
97,526

 
$
96,497

 
$
304,062

 
$
317,666

Scent
83,484

 
87,488

 
260,543

 
261,545

Frutarom
28,257

 
—

 
94,841

 
—

Global expenses
(8,333
)
 
(19,578
)
 
(39,892
)
 
(63,975
)
Operational Improvement Initiatives (a)
(712
)
 
(344
)
 
(1,652
)
 
(1,773
)
Acquisition Related Costs (b)
—

 
1

 
—

 
519

Integration Related Costs (c)
(10,511
)
 
(958
)
 
(36,825
)
 
(1,951
)
Restructuring and Other Charges, net (d)
(3,716
)
 
(927
)
 
(22,415
)
 
(1,837
)
(Losses) Gains on Sale of Assets
(372
)
 
1,630

 
(1,136
)
 
435

FDA Mandated Product Recall (e)
(250
)
 
9,800

 
(250
)
 
4,800

Frutarom Acquisition Related Costs (f)
2,914

 
(14,341
)
 
(5,182
)
 
(26,796
)
Compliance Review & Legal Defense Costs (g)
(3,623
)
 
—

 
(3,623
)
 
—

Operating profit
184,664

 
159,268

 
548,471

 
488,633

Interest expense
(33,497
)
 
(23,914
)
 
(102,662
)
 
(93,755
)
Loss on extinguishment of debt
—

 
(38,810
)
 
—

 
(38,810
)
Other income (expense)
5,699

 
4,158

 
15,114

 
25,389

Income before taxes
$
156,866

 
$
100,702

 
$
460,923

 
$
381,457


(a)
For 2019, represents accelerated depreciation related to a plant relocation in India and China. For 2018, represents accelerated depreciation related to a plant relocation in India and Taiwan.
(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.
(c)
For 2019, represents costs related to the integration of the Frutarom acquisition, principally advisory services. For 2018, represents costs related to the integration of David Michael and Frutarom.
(d)
For 2019, represents costs primarily related to the Frutarom Integration Initiative and the 2019 Severance Charges program. For 2018, represents severance costs related to the 2017 Productivity Program.
(e)
For 2019, represents additional claims that management will pay to co-packers. For 2018, represents recoveries from the supplier for the third quarter, partially offset by final payments to the customer made for the affected product in the first quarter.
(f)
Represents transaction-related costs and expenses related to the acquisition of Frutarom. For the three months ended September 30, 2019, amount primarily relates to a measurement period adjustment to the amount of the inventory "step-up" recorded. For the nine months ended September 30, 2019, amount primarily includes amortization for inventory "step-up" costs and transaction costs. For 2018, amount represents transaction-related administrative costs and expenses related to the acquisition of Frutarom.
(g)
Costs related to reviewing the nature of inappropriate payments and review of compliance in certain other countries. In addition, includes legal costs for related shareholder lawsuits.

Net sales are attributed to individual regions based upon the destination of product delivery are as follows:
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(SHARES IN THOUSANDS)
2019
 
2018
 
2019
 
2018
Europe, Africa and Middle East
$
512,715

 
$
285,519

 
$
1,570,415

 
$
887,680

Greater Asia
281,461

 
237,415

 
862,680

 
723,194

North America
286,741

 
248,661

 
881,718

 
738,857

Latin America
186,428

 
135,953

 
541,502

 
408,761

Consolidated
$
1,267,345

 
$
907,548

 
$
3,856,315

 
$
2,758,492

 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(SHARES IN THOUSANDS)
2019
 
2018
 
2019
 
2018
Net sales related to the U.S.
$
254,438

 
$
238,342

 
$
796,488

 
$
702,653

Net sales attributed to all foreign countries
1,012,907

 
669,206

 
3,059,827

 
2,055,839

No non-U.S. country had net sales in any period presented greater than 6% of total consolidated net sales.
Pending change in Reportable Operating Segments and Reporting Units
During the second quarter of 2019, the Company announced that it will be reorganizing its business unit structure into three segments: Taste, Scent and Nutrition & Ingredients. Under the new organization, two parts of the existing Frutarom segment will be included within the existing Taste business unit and a third business unit, Nutrition & Ingredients, will be created that will contain substantially all of the remaining parts of the existing Frutarom business unit. The Company expects to implement the new organizational structure by the end of the first quarter of 2020.