UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                         

Commission file number 1-4858

 INTERNATIONAL FLAVORS & FRAGRANCES INC.

(Exact name of registrant as specified in its charter)

New York	13-1432060
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

521 West 57th Street, New York, NY 10019-2960

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code (212) 765-5500

 Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value 12 1/2¢ per share	IFF	New York Stock Exchange
6.00% Tangible Equity Units	IFFT	New York Stock Exchange
0.500% Senior Notes due 2021	IFF 21	New York Stock Exchange
1.750% Senior Notes due 2024	IFF 24	New York Stock Exchange
1.800% Senior Notes due 2026	IFF 26	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No   ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒   No   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes   ☐ No  ☒ 

Number of shares outstanding as of October 30, 2020: 106,933,358

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

INTERNATIONAL FLAVORS & FRAGRANCES INC.

CONSOLIDATED BALANCE SHEET

(Unaudited)

(DOLLARS IN THOUSANDS)	September 30, 2020		December 31, 2019
ASSETS
Current Assets:
Cash and cash equivalents	$	469,840	$	606,823
Restricted cash	12,841		17,122
Trade receivables (net of allowances of $22,513 and $16,428, respectively)	928,625		876,197
Inventories: Raw materials	589,775		565,071
Work in process	46,169		44,532
Finished goods	515,337		513,465
Total Inventories	1,151,281		1,123,068
Prepaid expenses and other current assets	383,618		319,334
Total Current Assets	2,946,205		2,942,544
Property, plant and equipment, at cost	2,789,794		2,690,768
Accumulated depreciation	(1,409,371)		(1,303,848)
	1,380,423		1,386,920
Goodwill	5,427,482		5,497,596
Other intangible assets, net	2,675,482		2,851,935
Other assets	655,782		608,416
Total Assets	$	13,085,374	$	13,287,411
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Bank borrowings, overdrafts, and current portion of long-term debt	$	440,962	$	384,958
Accounts payable	505,259		510,372
Accrued payroll and bonus	107,301		102,704
Dividends payable	82,311		80,038
Other current liabilities	480,426		474,118
Total Current Liabilities	1,616,259		1,552,190
Long-term debt	3,890,762		3,997,438
Retirement liabilities	257,993		265,370
Deferred income taxes	612,744		641,456
Other liabilities	517,296		502,366
Total Other Liabilities	5,278,795		5,406,630
Commitments and Contingencies (Note 14)
Redeemable noncontrolling interests	100,005		99,043
Shareholders’ Equity:
Common stock 12 1/2¢ par value; 500,000,000 shares authorized; 128,526,137 shares issued as of September 30, 2020 and December 31, 2019; and 106,933,358 and 106,787,299 shares outstanding as of September 30, 2020 and December 31, 2019, respectively	16,066		16,066
Capital in excess of par value	3,847,824		3,823,152
Retained earnings	4,170,894		4,117,804
Accumulated other comprehensive loss	(939,419)		(716,894)
Treasury stock, at cost (21,592,779 and 21,738,838 shares as of September 30, 2020 and December 31, 2019, respectively)	(1,017,158)		(1,022,824)
Total Shareholders’ Equity	6,078,207		6,217,304
Noncontrolling interest	12,108		12,244
Total Shareholders’ Equity including Noncontrolling interest	6,090,315		6,229,548
Total Liabilities and Shareholders’ Equity	$	13,085,374	$	13,287,411

See Notes to Consolidated Financial Statements

1

INTERNATIONAL FLAVORS & FRAGRANCES INC.

CONSOLIDATED STATEMENT OF INCOME AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)	2020		2019		2020		2019
Net sales	$	1,268,076	$	1,267,345	$	3,814,166	$	3,856,315
Cost of goods sold	743,649		734,257		2,242,030		2,245,729
Gross profit	524,427		533,088		1,572,136		1,610,586
Research and development expenses	89,968		85,077		256,825		260,489
Selling and administrative expenses	234,520		210,829		694,641		634,111
Amortization of acquisition-related intangibles	47,738		48,430		144,922		143,964
Restructuring and other charges, net	1,497		3,716		8,299		22,415
Losses on sales of fixed assets	415		372		1,568		1,136
Operating profit	150,289		184,664		465,881		548,471
Interest expense	34,844		33,497		99,046		102,662
Other expense (income), net	9,945		(5,699)		4,762		(15,114)
Income before taxes	105,500		156,866		362,073		460,923
Taxes on income	19,269		27,059		61,265		81,033
Net income	86,231		129,807		300,808		379,890
Net income attributable to noncontrolling interests	1,403		2,683		5,169		7,560
Net income attributable to IFF stockholders	84,828		127,124		295,639		372,330
Other comprehensive income (loss), net, after tax:
Foreign currency translation adjustments	79,291		(204,853)		(226,519)		(176,490)
(Losses) gains on derivatives qualifying as hedges	(4,751)		2,939		(6,405)		3,257
Pension and postretirement net liability	3,507		2,721		10,399		7,908
Other comprehensive income (loss), net	78,047		(199,193)		(222,525)		(165,325)
Comprehensive income (loss) attributable to IFF stockholders	$	162,875	$	(72,069)	$	73,114	$	207,005
Net income per share - basic	$	0.76	$	1.15	$	2.68	$	3.34
Net income per share - diluted	$	0.75	$	1.13	$	2.64	$	3.30
Average number of shares outstanding - basic	112,183		111,998		112,148		111,953
Average number of shares outstanding - diluted	113,622		113,493		113,631		113,133

See Notes to Consolidated Financial Statements

2

INTERNATIONAL FLAVORS & FRAGRANCES INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
(DOLLARS IN THOUSANDS)	2020		2019
Cash flows from operating activities:
Net income	$	300,808	$	379,890
Adjustments to reconcile to net cash provided by operating activities
Depreciation and amortization	243,576		235,429
Deferred income taxes	(37,146)		(35,134)
Losses on sale of assets	1,568		1,136
Stock-based compensation	27,177		26,426
Pension contributions	(18,901)		(16,390)
Changes in assets and liabilities, net of acquisitions:
Trade receivables	(94,292)		(22,878)
Inventories	(42,771)		(84,140)
Accounts payable	21,593		(39,332)
Accruals for incentive compensation	19,033		(20,726)
Other current payables and accrued expenses	59,962		(12,161)
Other assets	(72,886)		(58,016)
Other liabilities	7,307		28,931
Net cash provided by operating activities	415,028		383,035
Cash flows from investing activities:
Cash paid for acquisitions, net of cash received	—		(49,065)
Additions to property, plant and equipment	(124,070)		(160,449)
Additions to intangible assets	—		(6,070)
Proceeds from life insurance contracts	1,739		1,890
Maturity of net investment hedges	(14,597)		—
Proceeds from disposal of assets	18,202		34,607
Proceeds from unwinding of cross currency swap derivative instruments	—		25,900
Contingent consideration paid	—		(4,655)
Net cash used in investing activities	(118,726)		(157,842)
Cash flows from financing activities:
Cash dividends paid to shareholders	(240,273)		(233,477)
(Decrease) increase in revolving credit facility and short term borrowings	(655)		11
Deferred financing costs	(3,205)		—
Repayments on debt	(335,084)		(100,785)
Proceeds from issuance of long-term debt	200,000		—
Contingent consideration paid	(9,562)		(21,791)
Purchases of redeemable noncontrolling interest	(21,566)		—
Proceeds from issuance of stock in connection with stock options	—		200
Employee withholding taxes paid	(7,664)		(9,966)
Net cash used in financing activities	(418,009)		(365,808)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(18,712)		(3,853)
Net change in cash, cash equivalents and restricted cash	(140,419)		(144,468)
Cash, cash equivalents and restricted cash at beginning of year	623,945		648,522
Cash, cash equivalents and restricted cash at end of period	$	483,526	$	504,054
Supplemental Disclosures:
Interest paid, net of amounts capitalized	$	112,653	$	122,121
Income taxes paid	101,307		98,819
Accrued capital expenditures	22,523		15,826

See Notes to Consolidated Financial Statements

3

INTERNATIONAL FLAVORS & FRAGRANCES INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(Unaudited)

(DOLLARS IN THOUSANDS)	Common stock		Capital in excess of par value		Retained earnings		Accumulated  other comprehensive (loss) income		Treasury stock			Non-controlling interest		Total
									Shares	Cost
Balance at June 30, 2019	$	16,066	$	3,805,883	$	4,069,211	$	(668,359)	(21,751,837)	$	(1,023,422)	$	10,608	$	6,209,987
Net income					127,124							657		127,781
Adoption of ASU 2017-12					(1,962)									(1,962)
Cumulative translation adjustment							(204,853)							(204,853)
Gains on derivatives qualifying as hedges; net of tax of $(348)							2,939							2,939
Pension liability and postretirement adjustment; net of tax of $(1,937)							2,721							2,721
Cash dividends declared ($0.75 per share)					(80,027)									(80,027)
Stock options/SSARs			579						212	9				588
Vested restricted stock units and awards			28						1,410	67				95
Stock-based compensation			8,126											8,126
Redeemable NCI			1,736											1,736
Dividends paid on noncontrolling interest and Other					(47)							(96)		(143)
Balance at September 30, 2019	$	16,066	$	3,816,352	$	4,114,299	$	(867,552)	(21,750,215)	$	(1,023,346)	$	11,169	$	6,066,988

(DOLLARS IN THOUSANDS)	Common stock		Capital in excess of par value		Retained earnings		Accumulated  other comprehensive (loss) income		Treasury stock			Non-controlling interest		Total
									Shares	Cost
Balance at June 30, 2020	$	16,066	$	3,838,047	$	4,168,378	$	(1,017,466)	(21,594,097)	$	(1,017,220)	$	13,111	$	6,000,916
Net income					84,828							281		85,109
Cumulative translation adjustment							79,291							79,291
Losses on derivatives qualifying as hedges; net of tax of $709							(4,751)							(4,751)
Pension liability and postretirement adjustment; net of tax of $(1,031)							3,507							3,507
Cash dividends declared ($0.77 per share)					(82,311)									(82,311)
Stock options/SSARs			626						424	20				646
Vested restricted stock units and awards			92						894	42				134
Stock-based compensation			8,195											8,195
Redeemable NCI			864											864
Dividends paid on noncontrolling interest and Other					(1)							(1,284)		(1,285)
Balance at September 30, 2020	$	16,066	$	3,847,824	$	4,170,894	$	(939,419)	(21,592,779)	$	(1,017,158)	$	12,108	$	6,090,315

See Notes to Consolidated Financial Statements

4

INTERNATIONAL FLAVORS & FRAGRANCES INC.

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY

(Unaudited)

(DOLLARS IN THOUSANDS)	Common stock		Capital in excess of par value		Retained earnings		Accumulated  other comprehensive (loss) income		Treasury stock			Non-controlling interest		Total
									Shares	Cost
Balance at January 1, 2019	$	16,066	$	3,793,609	$	3,956,221	$	(702,227)	(21,906,935)	$	(1,030,718)	$	10,423	$	6,043,374
Net income					372,330							2,163		374,493
Adoption of ASU 2016-02					23,094									23,094
Adoption of ASU 2017-12					(981)									(981)
Cumulative translation adjustment							(176,490)							(176,490)
Gains on derivatives qualifying as hedges; net of tax of $39							3,257							3,257
Pension liability and postretirement adjustment; net of tax of $(3,038)							7,908							7,908
Cash dividends declared ($2.21 per share)					(235,730)									(235,730)
Stock options/SSARs			5,664						14,214	670				6,334
Vested restricted stock units and awards			(10,940)						142,506	6,702				(4,238)
Stock-based compensation			26,426											26,426
Redeemable NCI			1,593											1,593
Dividends paid on noncontrolling interest and Other					(635)							(1,417)		(2,052)
Balance at September 30, 2019	$	16,066	$	3,816,352	$	4,114,299	$	(867,552)	(21,750,215)	$	(1,023,346)	$	11,169	$	6,066,988

(DOLLARS IN THOUSANDS)	Common stock		Capital in excess of par value		Retained earnings		Accumulated  other comprehensive (loss) income		Treasury stock			Non-controlling interest		Total
									Shares	Cost
Balance at January 1, 2020	$	16,066	$	3,823,152	$	4,117,804	$	(716,894)	(21,738,838)	$	(1,022,824)	$	12,244	$	6,229,548
Net income					295,639							1,689		297,328
Cumulative translation adjustment							(226,519)							(226,519)
Losses on derivatives qualifying as hedges; net of tax of $1,007							(6,405)							(6,405)
Pension liability and postretirement adjustment; net of tax of $(3,218)							10,399							10,399
Cash dividends declared ($2.27 per share)					(242,546)									(242,546)
Stock options/SSARs			(623)						57,652	2,743				2,120
Vested restricted stock units and awards			(6,846)						88,407	2,923				(3,923)
Stock-based compensation			27,177											27,177
Redeemable NCI			4,964											4,964
Dividends paid on noncontrolling interest and Other					(3)							(1,825)		(1,828)
Balance at September 30, 2020	$	16,066	$	3,847,824	$	4,170,894	$	(939,419)	(21,592,779)	$	(1,017,158)	$	12,108	$	6,090,315

See Notes to Consolidated Financial Statements

5

INTERNATIONAL FLAVORS & FRAGRANCES INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.    NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These interim statements and related management’s discussion and analysis should be read in conjunction with the Consolidated Financial Statements and the related notes and management’s discussion and analysis of results of operations, liquidity and capital resources included in our 2019 Annual Report on Form 10-K (“2019 Form 10-K”). These interim statements are unaudited. The year-end balance sheet data included in this Form 10-Q was derived from audited financial statements, but does not include all disclosures required by generally accepted accounting principles in the United States of America. We have historically operated and continue to operate on a 52/53 week fiscal year ending on the Friday closest to the last day of the quarter. For ease of presentation, September 30 and December 31 are used consistently throughout this Form 10-Q and these interim financial statements and related notes to represent the period-end dates. For the 2020 and 2019 quarters, the actual closing dates were October 2 and September 27, respectively. The unaudited interim financial statements include all adjustments (consisting only of normal recurring adjustments) and accruals necessary in the judgment of management for a fair statement of the results for the periods presented. When used herein, the terms “IFF,” the “Company,” “we,” “us” and “our” mean International Flavors & Fragrances Inc. and its consolidated subsidiaries.

Use of Estimates

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and judgments that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. The inputs into our judgments and estimates consider the current economic implications of the novel coronavirus ("COVID-19") on our critical and significant accounting estimates, including estimates associated with future cash flows that are used in assessing the risk of impairment of certain long lived assets. Actual results could differ from those estimates.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Company's statement of cash flows periods ended September 30, 2020 and September 30, 2019 to the amounts reported in the Company's balance sheet as at September 30, 2020, December 31, 2019, September 30, 2019 and December 31, 2018.

(DOLLARS IN THOUSANDS)	September 30, 2020		December 31, 2019		September 30, 2019		December 31, 2018
Current assets
Cash and cash equivalents	$	469,840	$	606,823	$	494,897	$	634,897
Restricted cash	12,841		17,122		9,157		13,625
Noncurrent assets
Restricted cash included in Other assets	845		—		—		—
Cash, cash equivalents and restricted cash	$	483,526	$	623,945	$	504,054	$	648,522

Accounts Receivable

The Company has various factoring agreements in the U.S. and The Netherlands under which it can factor up to approximately $100 million in receivables. In addition, the Company has factoring agreements sponsored by certain customers. Under all of the arrangements, the Company sells the receivables on a non-recourse basis to unrelated financial institutions and accounts for the transactions as a sale of receivables. The applicable receivables are removed from the Company's Consolidated Balance Sheet when the cash proceeds are received by the Company.

Through these factoring programs, the Company removed $209.3 million and $205.7 million of receivables from its balance sheets as of September 30, 2020 and December 31, 2019, respectively, which are primarily related to the factoring agreements sponsored by certain customers.

The impact on cash provided by operations from participating in these programs was an increase of $3.6 million for the nine months ended September 30, 2020 and an increase of $36.8 million for the nine months ended September 30, 2019.

6

The cost of participating in these programs was $1.1 million and $1.7 million for the three months ended September 30, 2020 and 2019, respectively, and was $3.1 million and $4.7 million for the nine months ended September 30, 2020 and 2019, respectively.

Revenue Recognition

The Company recognizes revenue when control of the promised goods is transferred to its customers in an amount that reflects the consideration it expects to be entitled to in exchange for those goods. Sales, value added, and other taxes the Company collects are excluded from revenues. The Company receives payment in accordance with standard customer terms.

The following table presents the Company's revenues disaggregated by product categories:

	Three Months Ended September 30,				Nine Months Ended September 30,
(DOLLARS IN THOUSANDS)	2020		2019		2020		2019
Taste
Flavor compounds	$	674,240	$	697,787	$	2,062,718	$	2,112,801
Flavor ingredients	90,998		84,641		281,166		285,748
Total Taste	765,238		782,428		2,343,884		2,398,549
Scent
Fragrance compounds	404,524		389,949		1,170,860		1,155,127
Fragrance ingredients	98,314		94,968		299,422		302,639
Total Scent	502,838		484,917		1,470,282		1,457,766
Total revenues	$	1,268,076	$	1,267,345	$	3,814,166	$	3,856,315

Contract Assets

With respect to a small number of contracts for the sale of compounds, the Company has an “enforceable right to payment for performance to date” and as the products do not have an alternative use, the Company recognizes revenue for these contracts over time and records a contract asset using the output method. The output method recognizes revenue on the basis of direct measurements of the value to the customer of the goods or services transferred to date relative to the remaining goods or services promised under the contract.

The following table reflects the balances in the Company's accounts receivable, contract assets, and contract liabilities for the periods ended September 30, 2020 and December 31, 2019:

(DOLLARS IN THOUSANDS)	September 30, 2020		December 31, 2019
Receivables (included in Trade receivables)	$	951,138	$	892,625
Contract asset - Short term	960		2,736
Contract liabilities - Short term	4,648		11,107

Recent Accounting Pronouncements

In March 2020, the FASB issued Accounting Standards Update ("ASU") 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The ASU is intended to simplify various aspects related to the cessation of reference rates in certain financial markets that would otherwise create modification accounting or changes in estimate. This guidance is effective for the period from March 12, 2020 to December 31, 2022. The Company has not adopted any of the optional expedients or exceptions through September 30, 2020 but will continue to evaluate the possible adoption of any such expedients or exceptions during the effective period as circumstances evolve.

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” The ASU is intended to simplify various aspects related to accounting for income taxes. This guidance is effective for fiscal years beginning after December 15, 2020, and for interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements.

7

In August 2018, the FASB issued ASU 2018-15, “Intangibles - Goodwill and Other - Internal - Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (a consensus of the FASB Emerging Issues Task Force).” The ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). This guidance is effective for fiscal years beginning after December 15, 2019, and for interim periods within those fiscal years, with early adoption permitted. The Company adopted the guidance effective the first day of its 2020 fiscal year. The adoption did not have an impact on its consolidated financial statements but may impact the Company in the future as and when it enters into cloud computing arrangements.

In August 2018, the FASB issued ASU 2018-14, "Compensation - Retirement Benefits - Defined Benefit Plans (Subtopic 715-20)", which modifies the disclosure requirements on company-sponsored defined benefit plans. The ASU is effective for fiscal years beginning after December 15, 2020 on a retrospective basis to all periods presented. Early adoption is permitted. The Company adopted the guidance effective the first day of its 2020 fiscal year. The adoption did not have an impact on its Consolidated Financial Statements and will have a minimal impact on its disclosures in future periods.

Adoption of Standard Related to Expected Credit Losses

In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments", with subsequent amendments, which requires issuers to measure expected credit losses for financial assets based on historical experience, current conditions and reasonable and supportable forecasts. As such, an entity will use forward-looking information to estimate credit losses, which may result in earlier recognition of losses.

The Company adopted the guidance effective the first day of its 2020 fiscal year and performed an evaluation of the applicable criteria, including the aging of its trade receivables, recent write-off history and other factors related to future macroeconomic conditions. As a result of the evaluation, the Company determined that no adjustment would be required to the level of its allowances for bad debts or to the carrying value of any other financial asset.

The Company is exposed to credit losses primarily through its sales of products. To determine the appropriate allowance for expected credit losses, the Company considers certain credit quality indicators, such as aging, collection history, and creditworthiness of debtors. Regional and Global Credit committees review and approve specific customer allowance reserves. The allowance for expected credit losses is primarily based on two primary factors: i) the aging of the different categories of trade receivables, and ii) a specific reserve for accounts identified as uncollectable.

The Company also considers current and future economic conditions in the determination of the allowance. At September 30, 2020, the Company reported $928.6 million of trade receivables, net of allowances of $22.5 million. Based on the aging analysis as of September 30, 2020, approximately 87% of our accounts receivable were current based on the payment terms of the invoice. Receivables that are past due by over 365 days account for approximately 1% of our accounts receivable.

The following is a rollforward of the Company's allowances for bad debts for the nine months ended September 30, 2020:

(DOLLARS IN THOUSANDS)	Allowances for Bad Debts
Balance at December 31, 2019	$	16,428
Bad debt expense	7,443
Write-offs	(587)
Foreign exchange	(771)
Balance at September 30, 2020	$	22,513

The Company adjusted the amount of the allowances for bad debts as of December 31, 2019 to reflect the correct classification of amounts between the allowances for bad debts and Trade Receivables. The adjustment was for $8.2 million and had the effect of increasing both the allowances for bad debts and Trade Receivables.

During the first quarter of 2020, the Company increased its allowances for bad debts by approximately $3.0 million to reflect higher expected future write-offs of receivables due to the impact of the COVID-19 pandemic and its impact on the liquidity of certain customers. The Company has not made any additional increases to its allowances for bad debts, as a result of COVID-19, in the second and third quarters of 2020.

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NOTE 2. NET INCOME PER SHARE

A reconciliation of the shares used in the computation of basic and diluted net income per share is as follows: 

	Three Months Ended September 30,				Nine Months Ended September 30,
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)	2020		2019		2020		2019
Net Income
Net income attributable to IFF stockholders	$	84,828	$	127,124	$	295,639	$	372,330
Adjustment related to decrease in redemption value of redeemable noncontrolling interests in excess of earnings allocated	864		1,736		4,964		1,593
Net income available to IFF stockholders	$	85,692	$	128,860	$	300,603	$	373,923
Shares
Weighted average common shares outstanding (basic)(1)	112,183		111,998		112,148		111,953
Adjustment for assumed dilution(2):
Stock options and restricted stock awards	276		332		320		372
SPC portion of TEUs	1,163		1,163		1,163		808
Weighted average shares assuming dilution (diluted)	113,622		113,493		113,631		113,133
Net Income per Share
Net income per share - basic	$	0.76	$	1.15	$	2.68	$	3.34
Net income per share - diluted	0.75		1.13		2.64		3.30

_______________________ 

(1)For the three and nine months ended September 30, 2020 and 2019, the tangible equity units (“TEUs”) were assumed to be outstanding at the minimum settlement amount 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.

The Company declared a quarterly dividend to its shareholders of $0.77 and $0.75 per share for the three months ended September 30, 2020 and 2019, respectively. For the nine months ended September 30, 2020 and 2019, the Company declared quarterly dividends to its shareholders totaling $2.27 and $2.21 per share, respectively.

There were no stock options or stock-settled appreciation rights (“SSARs”) excluded from the computation of diluted net income per share for the three and nine months ended September 30, 2020 and 2019.

The Company issued 16,500,000 TEUs, consisting of a prepaid stock purchase contract ("SPC") and a senior amortizing note, for net proceeds of $800.2 million on September 17, 2018. For purposes of calculating basic net income per share, the SPCs were assumed to be settled at the minimum settlement amount of 0.3134 shares per SPC on September 30, 2020 and 2019. For purposes of calculating diluted earnings per share, the SPCs were assumed to be settled at a conversion factor not to exceed 0.3839 on September 30, 2020 and 2019. The SPC conversion factor is based on the 20 day volume-weighted average price (“VWAP”) per share of the Company’s common stock. Per the TEU agreement, the maximum settlement amount is 0.3839 shares per SPC.

The Company has issued shares of purchased restricted common stock and purchased restricted common stock units (collectively “PRSUs”) which contain rights to nonforfeitable dividends while these shares are outstanding and thus are considered participating securities. Such securities are required to be included in the computation of basic and diluted earnings per share pursuant to the two-class method. The Company did not present the two-class method since the difference between basic and diluted net income per share for both unrestricted common shareholders and PRSU shareholders was less than $0.01 per share for each period presented, except for the nine months ended September 30, 2020 where the difference was less than $0.03 per share, and the number of PRSUs outstanding as of September 30, 2020 and 2019 was immaterial. Net income allocated to such PRSUs was $0.1 million and $0.2 million for the three months ended September 30, 2020 and 2019, respectively, and $0.5 million for both the nine months ended September 30, 2020 and 2019.

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NOTE 3.    ACQUISITIONS

Pending Transaction with Nutrition & Biosciences, Inc.

On December 15, 2019, the Company entered into definitive agreements with DuPont de Nemours, Inc. (“DuPont”), including an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which DuPont will transfer its nutrition and biosciences business to Nutrition & Biosciences, Inc., a Delaware corporation and wholly owned subsidiary of DuPont (“N&B”), and N&B will merge with and into a wholly owned subsidiary of IFF in exchange for a number of shares of IFF common stock, par value $0.125 per share (“IFF Common Stock”) (collectively, the “DuPont N&B Transaction”). In connection with the transaction, DuPont will receive a one-time $7.3 billion special cash payment (the “Special Cash Payment”), subject to certain adjustments. As a result of the DuPont N&B Transaction, holders of DuPont’s common stock will own approximately 55.4% of the outstanding shares of IFF on a fully diluted basis.

Completion of the DuPont N&B Transaction is subject to various closing conditions, including, among other things, (1) approval by IFF’s shareholders of the issuance of IFF Common Stock in connection with the transaction (which approval has been obtained); (2) the effectiveness of the registration statements to be filed with the Securities and Exchange Commission pursuant to the Merger Agreement; and (3) the expiration of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (which waiting period has expired), and obtaining certain other consents, authorizations, orders or approvals from governmental authorities. We expect that the transaction will close in early 2021.

On December 15, 2019, IFF and N&B entered into a commitment letter which provides $7.5 billion in an aggregate principal amount of senior unsecured bridge term loans (the "Bridge Loans"). On January 17, 2020, N&B entered into a term loan credit agreement, as amended on August 25. 2020, providing for unsecured term loan facilities in an aggregate principal amount of $1.25 billion (the “Term Loan Facilities”), which reduced the commitments under the Bridge Loans commitment letter by a corresponding amount. On September 16, 2020, N&B issued $6.25 billion of senior unsecured notes (the “N&B Notes”), which reduced the remaining commitments under the Bridge Loans commitment letter in their entirety. The Bridge Loans commitment letter was also terminated as of such date. The N&B Notes, together with the Term Loan Facilities, will be used to finance the Special Cash Payment and to pay related fees and expenses. Following the consummation of the merger, all obligations of N&B with respect to the Term Loan Facilities and the N&B Notes will be guaranteed by IFF (or at the election of N&B and IFF, assumed by IFF).

On August 27, 2020, a special shareholder meeting was held and IFF shareholders voted to approve the issuance of shares of IFF Common Stock in connection with the DuPont N&B Transaction pursuant to the Merger Agreement.

2019 Acquisition Activity

During the second quarter of 2019, the Company acquired the remaining 50% interest in an equity method investee located in Canada. The purchase of the additional interest increased the Company's ownership of the investee to 100%. The purchase price for the remaining 50% was approximately $37 million, including cash and an accrual for the amount expected to be paid in contingent consideration. The Company began to consolidate the results of the acquired entity from the date on which it acquired the remaining 50% interest during the second quarter of 2019. Goodwill of approximately $30 million and intangible assets of $20 million were recorded in connection with the acquisition.

During the first quarter of 2019, the Company acquired 70% of a company in Europe and increased its ownership of an Asian company from 49% to 60%. The total purchase price for the two acquisitions made in the first quarter of 2019 was $52 million, excluding cash acquired and including $19 million of contingent consideration and deferred payments. The purchase price allocations have been performed and resulted in goodwill of approximately $47 million and intangible assets of $28 million.

During the first quarter of 2020, the Company completed the purchase price allocations for all three of the transactions that were made during 2019. As a result of finalizing the purchase price allocations, adjustments were recorded to increase fixed assets by $13 million, customer relationships and other intangible assets by $5 million and approximately $3 million related to deferred tax liabilities and to decrease goodwill by $15 million. The income statement impact of the finalization of purchase accounting was not material.

Pro forma information has not been presented as the entities acquired in 2019 were not material.

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NOTE 4.    RESTRUCTURING AND OTHER CHARGES, NET

Restructuring and other charges primarily consist of separation costs for employees including severance, outplacement and other employee benefit costs ("Severance"), charges related to the write-down of fixed assets of plants to be closed ("Fixed asset write-down") and all other related restructuring ("Other") costs. All restructuring and other charges, net are separately stated on the Consolidated Statement of Comprehensive Income (Loss).

Frutarom Integration Initiative

In connection with the acquisition of Frutarom, the Company began to execute an integration plan that, among other initiatives, seeks to optimize its manufacturing network. As part of the Frutarom Integration Initiative, the Company expects to close approximately 35 manufacturing sites with most of the closures targeted to occur by the end of 2021. During 2019, the Company announced the closure of ten sites, of which six sites were in Europe, Africa and Middle East, two sites in Latin America, and one