INTERNATIONAL FLAVORS & FRAGRANCES INC - FORM 8-K - EX-99.3

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EX-99.2 - EX-99.2 - INTERNATIONAL FLAVORS & FRAGRANCES INC	d578168dex992.htm
EX-99.1 - EX-99.1 - INTERNATIONAL FLAVORS & FRAGRANCES INC	d578168dex991.htm
EX-23.1 - EX-23.1 - INTERNATIONAL FLAVORS & FRAGRANCES INC	d578168dex231.htm
8-K - FORM 8-K - INTERNATIONAL FLAVORS & FRAGRANCES INC	d578168d8k.htm

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

On May 7, 2018, IFF, Frutarom and Merger Sub entered into a merger agreement that provides for the acquisition of Frutarom by IFF. Subject to approval of Frutarom shareholders and the satisfaction or waiver of certain other closing conditions, IFF will acquire Frutarom through the merger of Merger Sub with and into Frutarom, with Frutarom surviving the merger and becoming a wholly owned subsidiary of IFF.

The following unaudited pro forma condensed combined financial information is presented to illustrate the estimated effects of the merger and certain other adjustments listed below.

The unaudited pro forma condensed combined balance sheet as of March 31, 2018, and the unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2018 and the year ended December 31, 2017, respectively, are presented herein. The unaudited pro forma condensed combined balance sheet combines the unaudited consolidated balance sheets of IFF and Frutarom as of March 31, 2018, and gives effect to the merger as if it occurred on March 31, 2018. The unaudited pro forma condensed combined statements of operations combine the historical results of IFF and Frutarom for the three months ended March 31, 2018, and the year ended December 31, 2017, and give effect to the merger as if it occurred on January 1, 2017. The historical financial information has been adjusted to give effect to pro forma adjustments that are (i) directly attributable to the merger, (ii) factually supportable, and (iii) with respect to the unaudited condensed combined statements of operations, expected to have a continuing impact on the combined entity’s condensed results.

The merger of IFF and Frutarom will be accounted for using the acquisition method of accounting as per the provisions of Accounting Standards Codification 805, “Business Combinations”, which we refer to as ASC 805, with IFF representing the accounting acquirer under this guidance. The unaudited pro forma condensed combined financial statements were prepared in accordance with Article 11 of Regulation S-X and primarily give effect to the merger adjustments, which include:

•

Adjustments to reconcile Frutarom’s historical audited and unaudited financial statements prepared in accordance with IFRS as issued by the IASB to U.S. GAAP;

•

Conforming accounting policies and presentation;

•

Application of the acquisition method of accounting in connection with the merger;

•

Adjustments to reflect repayment of certain existing debt facilities of Frutarom and financing arrangements entered into in connection with the merger; and

•

Effect of acquisition-related costs in connection with the merger.

The pro forma adjustments included in this document are subject to modification based on changes in interest rates, changes in share prices, the final determination of the fair value of the assets acquired and liabilities assumed, additional analysis, and additional information that may become available, which may cause the final adjustments to be materially different from the pro forma condensed combined financial statements presented herein. Following the consummation of the merger, IFF management will perform a detailed review of Frutarom’s accounting policies in an effort to determine if differences in accounting policies require further reclassification of Frutarom’s results of operations or reclassification of assets or liabilities to conform to IFF’s accounting policies and classification. As a result, IFF may subsequently identify additional material differences in the accounting policies which could have a material impact on the unaudited pro forma combined financial information.

The unaudited pro forma condensed combined financial information presented is for informational purposes only and is not necessarily indicative of the financial position or results of operations that would have been realized if the merger had been completed on the dates set forth above, nor is it indicative of future results or financial position of the combined company. Additionally, the final determination of the purchase price and the purchase price allocation, upon the completion of the merger, will be based on Frutarom’s net assets acquired as of that date and will depend on a number of factors that cannot be predicted with certainty at this time. The unaudited pro forma condensed combined financial information does not reflect any anticipated synergies or dis-synergies, operating efficiencies or cost savings that may result from the merger or potential divestitures that may occur prior to, or subsequent to, the completion of the merger or any acquisition and integration costs that may be incurred. The pro forma adjustments, which IFF believes are reasonable under the circumstances, are preliminary and are based upon available information and certain assumptions described in the accompanying notes to the unaudited pro forma condensed combined financial information. Actual results and valuations may differ materially from the assumptions within the

accompanying unaudited pro forma condensed combined financial information. Any changes to IFF’s stock price, from July 31, 2018 through the date the merger is completed, will also change the purchase price, which may include the recording of a lower or higher amount of goodwill. The final adjustments may be materially different from the pro forma condensed combined financial statements presented in this document.

The unaudited pro forma condensed combined financial information should be read in conjunction with the notes to the unaudited pro forma condensed combined financial information and Frutarom’s audited financial statements included elsewhere in this document, as well as IFF’s consolidated financial statements and related notes thereto contained in its Annual Report on Form 10-K for the year ended December 31, 2017 and IFF’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2018.

Unaudited Pro Forma Condensed Combined Balance Sheet

As of March 31, 2018

(In USD thousands, except shares and per-share data)


	Historical
	IFF (US GAAP)		FRUTAROM (US GAAP)		Purchase Accounting Adjustments			Notes		Other Pro Forma Adjustments			Notes		Total
Assets
Current Assets:
Cash and Cash Equivalents		305,276		161,359		(4,250,437	)		3		3,931,253			6k		147,451
Trade receivables, net		734,378		297,670		—					—					1,032,048
Inventory		687,817		348,798		42,202			6c		—					1,078,817
Prepaid expenses and other current assets		242,870		28,827		—					—					271,697

Total Current Assets		1,970,341		836,654		(4,208,235	)				3,931,253					2,530,013
Property, plant and equipment, net		887,483		341,612		—					—					1,229,095
Goodwill		1,166,022		589,250		3,660,834			6b		—					5,416,106
Other intangible assets, net		414,055		430,851		2,059,149			4		—					2,904,055
Deferred income taxes assets		88,231		5,630		—					—					93,861
Other assets		155,144		33,839		—					—					188,983

Total Assets		4,681,276		2,237,836		1,511,748					3,931,253					12,362,113

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short term borrowings		36,819		389,290		—					194,543			6f		620,652
Accounts payable		324,262		222,114		—					—					546,376
Dividends payable		54,404		8,471		10,249			3		—					73,124
Other current liabilities		301,267		14,042		46,158			4		(17,874	)		6j		343,593

Total Current Liabilities		716,752		633,917		56,407					176,669					1,583,745

Long-term debt		1,676,211		452,004		—					1,866,571			6f		3,994,786
Retirement liabilities		226,937		35,024		—					—					261,961
Deferred income tax liabilities		—		67,062		398,503			6d		—					465,565
Other liabilities		282,414		28,143		(4,186	)		4		—					306,371

Total Other Liabilities		2,185,562		582,233		394,317					1,866,571					5,028,683

Redeemable Noncontrolling Interest		—		102,803		—					—					102,803

Shareholders’ Equity:
Common Stock		14,470		17,093		(15,233	)		6e		1,381			6f		17,711
Capital in excess of par value		166,517		115,794		1,857,828			6e		2,001,852			6f		4,141,991
Other equity		1,592,163		781,571		(781,571	)		6e		(115,220	)		6e		1,476,943

Total Shareholders’ Equity		1,773,150		914,458		1,061,024					1,888,013					5,636,645

Noncontrolling interest		5,812		4,425		—					—					10,237

Total Shareholders’ Equity including NCI		1,778,962		918,883		1,061,024					1,888,013					5,646,882

Total Liabilities and Shareholders’ Equity		4,681,276		2,237,836		1,511,748					3,931,253					12,362,113

See the accompanying “Notes to the Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 6, which are an integral part hereof. The pro forma adjustments are explained in the notes below.

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Quarter Ended March 31, 2018

(In USD thousands, except shares and per-share data)


	Historical
	IFF (US GAAP)			FRUTAROM (US GAAP)			Purchase Accounting Adjustments			Notes		Other Pro Forma Adjustments			Notes		Total
*Revenue:*
Net sales		930,928			384,805			—					—					1,315,733
Cost of goods sold		525,119			229,067			—					—					754,186

Gross profit		405,809			155,738			—					—					561,547


*Expenses:*
Research and development expenses		78,476			15,641			—					—					94,117
Selling and administrative expenses		142,644			71,839			—					—					214,483
Restructuring and other charges, net		717			—			—					—					717
Amortization of acquisition-related intangibles		9,185			6,828			28,547			6a		—					44,560
Gain on sales of fixed assets		(69	)		195			—					—					126

Total expenses		230,953			94,503			28,547					—					354,003

Operating profit		174,856			61,235			(28,547	)				—					207,544

*Other income (expense):*								—										—
Interest expense		16,595			5,965			—					13,564			6f		36,124
Other (income) expense, net		(576	)		(1,234	)		—					—					(1,810	)

Total other income (expense)		16,019			4,731			—					13,564					34,314

Income before taxes		158,837			56,504			(28,547	)				(13,564	)				173,230
Taxes on income		29,421			10,823			(5,481	)		6a		(3,243	)		6j		31,520

Net income (Including Noncontrolling Interests)		129,416			45,681			(23,066	)				(10,321	)				141,710
Less: noncontrolling interests		—			1,507			—					—					1,507

Net Income		129,416			44,174			(23,066	)				(10,321	)				140,203

Net income per share — basic		1.63			0.74												$	1.28
Net income per share — diluted		1.63			0.73												$	1.27
Basic shares outstanding		79,018			59,530													109,430
Diluted shares outstanding		79,393			60,339													110,701

Unaudited Pro Forma Condensed Combined Statement of Operations

For the Year Ended December 31, 2017

(In USD thousands, except shares and per share data)


	Historical
	IFF (US GAAP)			FRUTAROM (US GAAP)			Purchase Accounting Adjustments			Notes		Other Pro Forma Adjustments			Notes		Total
*Revenue:*
Net sales	$	3,398,719		$	1,362,396		$	—				$	—				$	4,761,115
Cost of goods sold		1,919,718		$	837,271			—					6,538			6i	$	2,763,527

Gross profit		1,479,001			525,125			—					(6,538	)				1,997,588


*Expenses:*
Research and development expenses		286,026			43,644			—					9,443			6i		339,113
Selling and administrative expenses		557,311			246,332			—					12,833			6i		816,476
Restructuring and other charges, net		19,711			(340	)		—					—					19,371
Amortization of acquisition-related intangibles		34,694			22,193			117,824			6a		—					174,711
Gain on sales of fixed assets		(184	)		1,934			—					—					1,750

Total expenses		897,558			313,763			117,824					22,276					1,351,421

Operating profit		581,443			211,362			(117,824	)				(28,814	)				646,167

*Other (income) expense:*
Interest expense		65,363			10,075			—					78,649			6f		154,087
Other (income) expense, net		(20,965	)		13,325			—					(28,814	)		6i		(36,454	)

Total other (income) expense		44,398			23,400			—					49,835					117,633

Income before taxes		537,045			187,962			(117,824	)				(78,649	)				528,534
Taxes on income		241,380			35,105			(23,094	)		6a		(18,788	)		6j		234,603

Net income (Including Noncontrolling Interests)		295,665			152,857			(94,730	)				(59,861	)				293,931
Less: noncontrolling interests		—			5,046			—					—					5,046

Net Income		295,665			147,811			(94,730	)				(59,861	)				288,885

Net income per share — basic		3.73			2.49													2.64
Net income per share — diluted		3.72			2.48													2.61
Basic shares outstanding		79,070			59,342													109,482
Diluted shares outstanding		79,370			59,632													110,678

NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

(In US$ thousands, except share and per share data)

Note 1—Description of Business Combination

On May 7, 2018, International Flavors & Fragrances (“IFF”) entered into an Agreement and Plan of Merger (the “merger agreement”) with Frutarom Industries Ltd., a company organized under the laws of the State of Israel (“Frutarom”) and Icon Newco Ltd., a company organized under the laws of the State of Israel and a wholly owned subsidiary of IFF (“Merger Sub”). Pursuant to the merger agreement, subject to the satisfaction or waiver of specified conditions, Merger Sub will merge with and into Frutarom (the “merger”), with Frutarom continuing as the surviving company in the merger and a wholly owned subsidiary of IFF.

At the completion of the merger, each ordinary share, par value Israeli New Shekel (to be referred as “NIS”) 1.00 per share, of Frutarom (the “Frutarom ordinary shares”) issued and outstanding immediately prior to the completion of the merger (other than Frutarom ordinary shares held by Frutarom as treasury stock (dormant shares) or held directly or indirectly by IFF, Merger Sub or any wholly owned subsidiary of Frutarom) will be converted into the right to receive (i) $71.19 in cash (the “cash consideration”) and (ii) 0.249 of a validly issued, fully paid and non-assessable share of common stock, par value $0.125 per share, of IFF (“IFF common stock”), with cash in lieu of fractional shares of IFF common stock otherwise issuable (such shares of IFF common stock and any such cash in lieu of fractional shares, together with the cash consideration, the “merger consideration”), in each case without interest and subject to applicable tax withholding.

At the completion of the merger, each Frutarom stock option and Frutarom restricted stock award that is outstanding and vested as of immediately prior to the completion of the merger, will be canceled in exchange for the right to receive the merger consideration in respect of each net share subject to such vested Frutarom stock option or Frutarom restricted stock award, less applicable tax withholding. For this purpose, “net share” means, with respect to a Frutarom stock option or Frutarom restricted stock award, the quotient of (i) the product of (A) the excess, if any, of the value of the merger consideration (calculated as specified in the merger agreement) over the exercise price or purchase price per Frutarom ordinary share (as applicable) subject to such Frutarom stock option or Frutarom restricted stock award, multiplied by (B) the number of Frutarom ordinary shares subject to such Frutarom stock option or Frutarom restricted stock award, divided by (ii) the value of the merger consideration.

The merger agreement provides for the Frutarom board of directors to declare a special dividend, on a per share basis, equal to the product of (a) 0.249 and (b) the aggregate per share value of IFF dividends with a record date after the date of the merger agreement and prior to the closing of the merger.

Note 2—Basis of Presentation

The accompanying unaudited pro forma condensed combined financial information was prepared in accordance with Article 11 of Regulation S-X and was based on the historical financial statements of IFF and Frutarom as of and for the year ended December 31, 2017 and as of and for the three months ended March 31, 2018. IFF is deemed to be the accounting acquirer and the pro forma adjustments are preliminary and are based on estimates that are subject to change. The combined group will not be a “foreign private issuer” as defined in Rule 405 under the Securities Act and Rule 3b-4(c) under the Exchange Act, accordingly the pro forma information of the combined group is prepared in accordance with US GAAP.

The unaudited pro forma condensed combined statements of operations were prepared using:

•

the historical unaudited consolidated statements of operations and comprehensive income of IFF for the three months ended March 31, 2018;

•

the historical audited consolidated statements of operations and comprehensive income of IFF for the year ended December 31, 2017;

•

the historical unaudited condensed consolidated statements of operations of Frutarom for the three months ended March 31, 2018; and

•

the historical audited consolidated income statement of Frutarom for the year ended December 31, 2017.

IFF’s historical audited and unaudited financial statements were prepared in accordance with U.S. GAAP and presented in thousands of U.S. dollars. Frutarom’s historical audited and unaudited financial statements were prepared in accordance with IFRS as issued by the IASB and presented in thousands of U.S. dollars. Certain reclassifications were made to align Frutarom’s financial statement presentation with that of IFF (see Note 5).

Frutarom’s historical audited and unaudited financial statements were reconciled to U.S. GAAP. In addition, a preliminary review of IFRS to U.S. GAAP differences and related accounting policies has been completed based on information made available to date (see Note 5 for further information). However, following the consummation of the merger, IFF management will conduct a detailed review. As a result of that review, IFF management may identify differences that, when finalized, could have a material impact on the unaudited pro forma condensed combined financial information.

The unaudited pro forma condensed combined statements of operations also include certain purchase accounting adjustments, including items expected to have a continuing impact on the condensed combined results.

Note 3—Estimated Purchase Price

Pursuant to the merger, shareholders of Frutarom will receive $71.19 in cash and 0.249 shares of IFF’s common stock for each Frutarom ordinary share held prior to the merger. If the aggregate number of shares of IFF common stock to be issued pursuant to the merger agreement would exceed 19.9% of the issued and outstanding shares of IFF common stock immediately prior to the entry into the merger agreement, rounded down to the nearest whole share, the exchange ratio will be reduced by the minimum extent necessary such that the foregoing clause is no longer true, and the cash component of the merger consideration will also be increased accordingly.

The following table summarizes the components of the preliminary estimated purchase price:


(In USD thousands, except share data and exchange ratio)
Estimated Frutarom’s shares outstanding⁽ⁱ⁾			59,542,645
Cash consideration per share⁽ⁱⁱ⁾		$	71.19

Total cash paid to shareholders of Frutarom			4,238,841

Estimated cash paid to vested stock option holders⁽ⁱⁱⁱ⁾			11,596
Estimated accrual for unvested stock option holders^(iv)			16,158
Estimated closing dividend payable^(v)			10,249

Estimated cash portion of purchase price	A		4,276,844


Estimated Frutarom’s shares outstanding			59,542,645
Exchange ratio^(vi)			0.249
Total common shares of IFF to be issued			14,826,119
IFF’s share price^(vii)			132.76

Total equity consideration paid to shareholders of Frutarom		$	1,968,316
Estimated equity consideration paid to vested stock Frutarom option holders⁽ⁱⁱⁱ⁾		$	7,166

Estimated equity portion of purchase price	B	$	1,975,482

Total estimated consideration to be paid	A+B	$	6,252,326

(i)	Number of shares outstanding as of May 7, 2018, i.e., date of signing of the merger agreement

(ii)	Cash consideration per share as per the merger agreement

(iii)

Estimated cash and equity consideration payable to the vested Frutarom stock option holders on a diluted basis

(iv)	Estimated pro rata portion of the unvested Frutarom stock options attributable to pre-combination services. The pro forma adjustment has been recorded in other current liabilities.

(v)

Estimated dividend payable to Frutarom shareholders prior to closing considering the exchange ratio, as set forth in the merger agreement, and IFF dividend rate. IFF’s current dividend rate ($0.69 per share) has been considered for the purpose of this computation. The amount is subject to change if IFF’s dividend rate changes prior to closing. The pro forma adjustment has been recorded in dividends payable.

(vi)	Exchange ratio as set forth in the merger agreement

(vii)

Closing price of IFF’s common stock on the New York Stock Exchange on July 31, 2018

The final estimated merger consideration could significantly differ from the amounts presented in the unaudited pro forma condensed combined financial information due to movements in IFF’s common stock price up to the closing date of the merger. A sensitivity analysis related to the fluctuation in the IFF’s common stock price was performed to assess the impact a hypothetical change of 10% on the closing price of IFF’s common stock on July 31, 2018, would have on the estimated merger consideration and goodwill as of the closing date. The following table shows the change in stock price, estimated merger consideration and goodwill:


	Purchase Price		Estimated Goodwill
As presented in the pro forma combined financial statements	$	6,252,326	$	4,250,084
10% increase in common stock price		6,450,717		4,448,476
10% decrease in common stock price		6,053,935		4,051,693

Note 4—Preliminary Purchase Price Allocation

Under the acquisition method of accounting, Frutarom’s assets and liabilities will be recorded at fair value at the date of the completion of the merger and combined with the historical carrying amounts of the assets and liabilities of IFF. In the unaudited pro forma condensed combined balance sheet, IFF’s cost to acquire Frutarom has been allocated to the assets acquired, liabilities assumed and goodwill based upon management’s preliminary estimate of what their respective fair values would be as if the merger closed on March 31, 2018. Accordingly, the unaudited pro forma condensed combined financial information includes a preliminary allocation of the purchase price based on assumptions and estimates that, while considered reasonable under the circumstances, are subject to changes, which may be material.

IFF has not completed a full, detailed valuation analysis necessary to determine the fair values of Frutarom’s identifiable assets to be acquired, liabilities to be assumed and redeemable and non-redeemable noncontrolling interest. The preliminary calculation of assets acquired and liabilities assumed performed for the purposes of these unaudited pro forma condensed combined financial statements was primarily limited to the identification and calculation of preliminary values for the intangible assets, property and equipment, inventory, deferred taxes and contingent consideration. As of the date hereof, the calculations necessary to estimate the fair values of the assets acquired and liabilities assumed have been performed based on publicly available benchmarking information as well as a variety of other assumptions, including market participant assumptions, as there are limitations on the type of information that can be exchanged between IFF and Frutarom at this time. Where applicable, the benchmark information was corroborated with an income approach methodology such as the relief from royalty or multi-period excess earnings method. IFF will continue to refine its identification and valuation of assets to be acquired and the liabilities to be assumed as further information becomes available.

The estimated values of the assets acquired, liabilities assumed and redeemable and non-redeemable noncontrolling interest will remain preliminary until after closing of the merger, at which time IFF will determine the fair values of assets acquired and liabilities assumed. The final determination of the purchase price allocation is anticipated to be completed as soon as practicable after completion of the merger and will be based on the fair values of the assets acquired and liabilities assumed as of the merger closing date. The final amounts allocated to assets acquired and liabilities assumed could differ significantly from the amounts presented in the unaudited pro forma condensed combined financial statements.

The following is a preliminary estimate of the assets to be acquired and the liabilities to be assumed by IFF in the merger, reconciled to the estimate of total consideration expected to be transferred (in USD thousands):


	Frutarom’s US GAAP (Note 5)			Fair Value Adjustments			Fair value
Purchase Consideration								6,252,326
Identifiable net assets:
Inventories		348,798			42,202			391,000
Property, plant and equipment		341,612			—			341,612
Identifiable intangible assets		430,851			2,059,149			2,490,000
Deferred tax assets		5,630						5,630
All other assets (excluding goodwill)		521,695			—			521,695
Existing contingent consideration		(42,186	)		4,186			(38,000	)
Transaction bonus		—			(30,000	)		(30,000	)
Deferred tax liabilities		(67,062	)		(398,503	)		(465,565	)
All other liabilities		(1,106,902	)		—			(1,106,902	)

Total identifiable net assets		432,436			1,677,034			2,109,470
Redeemabale Noncontrolling interest		(102,803	)		—			(102,803	)
Noncontrolling interest		(4,425	)		—			(4,425	)
Goodwill		589,250			3,660,834			4,250,084

Total		914,458			5,337,868			6,252,326

The amount allocated to identifiable intangible assets has been attributed to the following assets (in thousands):


	Estimated Useful Life		Amount
Product Formulas		10 years	$	340,000
Trade name		20 years		130,000
Customer relationships		20 years		2,020,000

Total identifiable intangible assets			$	2,490,000

These intangible assets will be amortized over the estimated useful lives on a straight line basis. IFF believes that it represents the pattern in which economic benefits will be consumed.

In addition, pursuant to the merger agreement, Frutarom has the right to grant a transaction bonus to its CEO and selected employees before the merger is consummated to the extent of up to $20 million each. The transaction bonus to the CEO will be payable immediately prior to the closing of the merger. The transaction bonus to employees is payable in two installments (i) 50% at closing and (ii) 50% after the completion of one year of service (subject to the terms of the merger agreement). IFF has determined that $30 million is a pre-merger expense to be accrued by Frutarom due to the fact that the transaction bonus was entered into by or on behalf of Frutarom. See table below (in USD thousands):


	Pre-combination expense		Post-combination expense
CEO	$	20,000		—
Selected employees		10,000		10,000

Total bonus	$	30,000	$	10,000

Accordingly, pro forma condensed combined balance sheet has been adjusted to reflect an adjustment of $30,000 for transaction bonus payable by Frutarom, declared before the merger is consummated. This amount together with $16,158 for the accrual for unvested Frutarom stock options attributable to pre-combination services (see Note 3) has been shown as an adjustment to other current liabilities.

Note 5—Adjustments to Frutarom’s Historical Financial Statements to Conform to U.S. GAAP

Frutarom’s consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB, which differs in certain material respects from U.S. GAAP.

The unaudited U.S. GAAP information includes a statement of financial position and statements of income of Frutarom derived from the historical consolidated financial statements as of and for the three months ended March 31, 2018 and the year ended December 31, 2017, prepared in accordance with IFRS as issued by the IASB. This balance sheet as of March 31, 2018 and statements of operations for the year ended December 31, 2017 and for the three months ended March 31, 2018 have been adjusted to reflect Frutarom’s consolidated statement of financial position and statements of profit or loss on a U.S. GAAP basis.

Certain balances presented in the historical Frutarom’s financial statements included within the unaudited pro forma condensed combined financial information have been reclassified to conform the presentation to that of IFF as indicated in the tables as below:

UNAUDITED FRUTAROM US GAAP BALANCE SHEET

As of March 31, 2018


	Frutarom (IFRS)			Reclassification Adjustments			Notes		IFRS to U.S. GAAP Adjustments			Notes		FRUTAROM (U.S. GAAP)
Assets
Current Assets:
Cash and Cash Equivalents		161,359			—					—					161,359
Accounts receivable:										—					—
Trade		273,004			(273,004	)		5a		—					—
Other		24,666			(24,666	)		5a		—					—
Trade receivables, net		—			297,670			5a		—					297,670
Prepaid expenses and advances to suppliers		28,827			(28,827	)		5b		—					—
Prepaid expenses and other current assets		—			28,827			5b		—					28,827
Inventory		348,798			—					—					348,798

		836,654			—					—					836,654


Non-Current Assets:
Property, plant and equipment		376,403			—					(34,791	)		5o		341,612
Intangible assets		1,020,101			(589,250	)		5c		—					430,851
Goodwill		—			589,250			5c		—					589,250
Investment in associates and available for
sale assets		27,446			(27,446	)		5d		—					—
Deferred income tax assets		5,630			—					—					5,630
Others		6,393			(6,393	)		5d		—					—
Other assets		—			33,839			5d		—					33,839

		1,435,973			—					(34,791	)				1,401,182

Total Assets		2,272,627			—					(34,791	)				2,237,836

Liabilities and equity
Current liabilities
Short term bank credit and loans and current
maturities of long-term loans		389,290			(389,290	)		5e		—					—
Short-term borrowings		—			389,290			5e		—					389,290
Accounts payable:										—					—
Trade		104,988			(104,988	)		5f		—					—
Other		156,152			(156,152	)		5g		—					—
Accounts Payable		—			222,114			5f, 5g		—					222,114
Leases		8,295			—					(8,295	)		5o		—
Dividends payable		8,471			—					—					8,471
Other current liabilities		—			21,614			5g		(7,572	)		5n		14,042

		667,196			(17,412	)				(15,867	)				633,917


NON-CURRENT LIABILITIES:
Long-term loans, net of current maturities		452,004			—					—					452,004
Retirement benefit obligations, net		35,024			—					—					35,024
Deferred income tax liabilities		67,062								—					67,062
Leases		26,496			—					(26,496	)		5o		—
Liability for shareholders of subsidiaries and
other		105,962			(10,731	)		5h		(95,231	)		5n		(0	)
Other liabilities		—			28,143			5h		—					28,143

		686,548			17,412					(121,727	)				582,233

TOTAL LIABILITIES		1,353,744			—					(137,594	)				1,216,150

Redeemable Noncontrolling Interest										102,803			5n		102,803

Equity attributable to owners of the parent:
Ordinary shares		17,093			—					—					17,093
Other capital surplus		115,794			(115,794	)		5i		—					—
Capital in excess of par value					115,794			5i		—					115,794
Translation differences		(34,423	)		34,423			5j		—					—
Retained earnings		819,827			(819,827	)		5j		—					—
Less-cost of company shares held by the
company		(3,833	)		3,833			5j		—					—
Other equity					781,571			5j		—					781,571

Total Shareholders’ Equity		914,458			—					—					914,458
Noncontrolling interest		4,425			—					—					4,425

TOTAL EQUITY		918,883			—					—					918,883

TOTAL EQUITY AND LIABILITIES		2,272,627			—					(34,791	)				2,237,836

UNAUDITED FRUTAROM US GAAP STATEMENT OF OPERATIONS

FOR THE PERIOD ENDED MARCH 31, 2018


	Frutarom IFRS			Reclassification Adjustments			Notes		IFRS to U.S. GAAP Adjustments			Notes		Frutarom U.S. GAAP
*Revenue:*
Net sales		384,805			—					—					384,805
Cost of Sales		229,067			(229,067	)		5k		—					—
Cost of goods sold		—			229,067			5k		—					229,067

Gross profit		155,738			—					—					155,738

Selling, marketing, research and development expenses—net		67,407			(67,407	)		5l		—					—
Research and development expenses		—			15,641			5l		—					15,641
Selling and administrative expenses		—			71,839			5l		—					71,839
General and administrative expenses		26,901			(26,901	)		5l		—					—
Amortization of acquisition-related intangibles		—			6,828			5l		—					6,828
Other expenses—net		(349	)		349			5l		—					—
Gain on sales of fixed assets		—			195			5l		—					195
Group’s share of earnings of companies accounted for at equity		(690	)		690			5l		—					—


Income From Operations		62,469			(1,234	)				—					61,235

Financial Expenses—net		5,965			(5,965	)		5m		—					—

Interest Expense		—			5,965			5m		—					5,965

Other (income) expense, net					(1,234	)		5l		—					(1,234	)


Income Before Taxes on Net Income		56,504			—					—					56,504
Income Tax		10,823			—					—					10,823

Net income (Including Noncontrolling Interests)		45,681			—					—					45,681
Less: noncontrolling interests		412			—					1,095			5n		1,507


Net Income		45,269			—					(1,095	)				44,174


Net income per share—basic		0.76													0.74

Net income per share—diluted		0.75													0.73

UNAUDITED FRUTAROM US GAAP STATEMENT OF OPERATIONS

FOR THE PERIOD ENDED DECEMBER 31, 2017


	Frutarom IFRS			Reclassification Adjustments			Notes		IFRS to U.S. GAAP Adjustments			Notes		Frutarom U.S. GAAP
*Revenue:*
Net sales		1,362,396			—					—					1,362,396
Cost of Sales		837,271			(837,271	)		5k		—					—
Cost of goods sold		—			837,271			5k		—					837,271

Gross profit		525,125			—					—					525,125

Selling, marketing, research and development expenses—net		220,014			(220,014	)		5l		—					—
Research and development expenses		—			43,644			5l		—					43,644
Selling and administrative expenses		—			246,332			5l		—					246,332
General and administrative expenses		92,155			(92,155	)		5l		—					—
Amortization of acquisition-related intangibles		—			22,193			5l							22,193
Restructuring and other charges, net		—			(340	)		5l							(340	)
Other expenses—net		3,392			(3,392	)		5l		—					—
Gain on sales of fixed assets		—			1,934			5l		—					1,934
Group’s share of earnings of companies accounted for at equity		(1,402	)		1,402			5l		—					—

Income From Operations		210,966			396					—					211,362

Financial Expenses—net		24,606			(24,606	)		5m		—					—

Interest Expense		—			10,075			5m		—					10,075

Other (income) expense, net					14,927			5l, 5m		(1,602	)		5p		13,325

Income Before Taxes on Net Income		186,360			—					1,602					187,962

Income Tax		34,797			—					308			5p		35,105

Net income (Including
Noncontrolling Interests)		151,563			—					1,294					152,857
Less: noncontrolling interests		1,884			—					3,162			5n		5,046

Net Income		149,679			—					(1,868	)				147,811

Net income per share — basic		2.52													2.49
Net income per share — diluted		2.51													2.48

Adjustments included in the column “Reclassification Adjustments” are as follows:

Represents certain reclassifications of historical Frutarom’s financial statement line items to conform to the expected financial statement line items of the combined group including:

Balance sheet items:

a)	Accounts receivable: Trade and Other have been reclassified to Trade receivables, net;

b)	Prepaid expenses and advances to suppliers have been reclassified to Prepaid expenses and other current assets;

c)	The portion of intangible assets that relates to goodwill was classified separately as goodwill;

d)	Investment in associates and available for sale assets and Others have been reclassified to Other assets;

e)	Short term bank credit and loans and current maturities of long-term loans have been reclassified to Short-term borrowings;

f)	Accounts payable: Trade has been reclassified to Accounts Payable;

Accounts payable: Other has been reclassified as follows: (i) an amount of $17,412 that represents the non-current portion of various contingent considerations, has been reclassified to Other liabilities and; (ii) an amount of $21,614 that represents $7,572 of Put-Option liability and $14,042 of the current portion of Contingent consideration, has been reclassified to Other current liabilities, and (iii) the remaining balance of $117,125 has been reclassified to Accounts Payable.

h)	The portion of liability for shareholders of subsidiaries and other that relates to long term portion of contingent consideration has been reclassified to Other liabilities;

i)	Other capital surplus has been reclassified to Capital in excess of par value; and

j)	Translation differences, Retained earnings, cost of company shares held by Frutarom have been condensed into other equity.

Statement of income items:

k)	Cost of Sales have been reclassified to Cost of goods sold;

l)	Selling, marketing, research and development expenses – net, General and administrative expenses, Other expenses – net and Group’s share of earnings of companies accounted for at equity have been reclassified in accordance with IFF’s presentation as below:


Frutarom’s Presentation	Year ended Dec 31, 2017			Period ended March 31, 2018			IFF’s Presentation	Year ended Dec 31, 2017			Period ended March 31, 2018
Selling, marketing, research and development expenses – net		220,014			67,407		Research and development expenses		43,644			15,641
General and administrative expenses		92,155			26,901		Selling and administrative expenses		246,332			71,839
Other expenses—net		3,392			(349	)	Restructuring and other charges, net		(340	)		—
Group’s share of earnings of companies accounted		(1,402	)		(690	)	Amortization of acquisition-related intangibles		22,193			6,828
							Losses (Gain) on sales of fixed assets		1,934			195
							Other (income) expense, net		396			(1,234	)

		314,159			93,269				314,159			93,269

m)	The Portion of Financial Expenses – net that relates to expenses on debt have been reclassified to Interest Expense and the remaining portion that relates to foreign exchange gain or loss has been reclassified to Other (income) expenses, net.

Adjustments included in the column “IFRS to U.S. GAAP Adjustments” are as follows:

The following adjustments have been made to convert Frutarom’s historical balance sheet as of March 31, 2018 and income statement for the three months ended March 31, 2018 and the year ended December 31, 2017 to U.S. GAAP for purposes of the pro forma presentation:

Reflects an adjustment to reclassify put option liability as redeemable noncontrolling interest as mezzanine equity. As part of several acquisitions effected by Frutarom, the noncontrolling interest holders of the acquired entities were granted an option to sell (“Put option”) their respective interests to Frutarom. In accordance with IFRS, Frutarom recognized a liability for such put options. Under U.S. GAAP, IFF determined the put options cannot be separated from the noncontrolling interest and the combination of a noncontrolling interest and the redemption feature require classification of such noncontrolling interest as a redeemable noncontrolling interest in the combined balance sheet. Further, those noncontrolling interest which are not currently redeemable but are probable to become redeemable are measured using the present value of the redemption value as of the earliest redemption date and the noncontrolling interest which are currently redeemable are measured at the maximum redemption amount. IFF has reviewed the computation of liabilities for put option under IFRS and determined that the amounts to be recorded for redeemable non-controlling interest under U.S. GAAP would be materially the same as the amount of such liabilities for put option recorded under IFRS. Accordingly, the unaudited pro forma condensed combined balance sheet as at March 31, 2018 was adjusted to reclassify the current and non-current portion of liability for put option that represented redeemable portion of noncontrolling interest as mezzanine equity which is presented between total liabilities and shareholders’ equity. In addition, as a result of the reclassification to mezzanine equity, a portion of the profit has been allocated to the relevant NCI in accordance with U.S. GAAP.

For the year ended December 31, 2017, Frutarom accounted for the lease arrangements entered into under IAS 17—Leases (“IAS 17”). Frutarom has elected to early adopt IFRS 16—Leases (“IFRS 16”) issued by the IASB, as of January 1, 2018, which requires entities to recognize a lease liability that reflects future lease payments and a “right-of-use” in all lease arrangements, with no distinction between capital/finance and operating leases subject to an exemption of certain short term leases or leases of low value assets. As a result of the early adoption of IFRS 16, Frutarom has recorded its operating leases as a “right to use” asset along with a corresponding lease liability in its historical balance sheet for the three months ended March 31, 2018. Regarding all leases, Frutarom applied the transitional provisions under IFRS 16 such that it initially recognized a liability at the commencement date at an amount equal to the present value of the lease payments during the lease, discounted using the effective interest rate as of that date, and concurrently recognized a right-of-use asset at an amount identical to the liability. As a result, adoption of the standard had no impact on equity and retained earnings of Frutarom as of initial application. IFF will adopt ASC 842 beginning January 1, 2019. Accordingly, IFF will reverse changes made by Frutarom under IFRS 16 and leases are accounted for under ASC 840 for the three months ending March 31, 2018.

Expected return on plan assets — Under IFRS, companies calculate a net interest cost (income) by applying the discount rate to the net pension benefit obligation or asset, while U.S. GAAP requires companies to calculate a separate return on plan assets using an estimated long-term rate of return on plan assets. The interest cost on the pension benefit obligation is generally the same under both IFRS and U.S. GAAP.

The following is a summary of the calculation of the pro forma income statement adjustment of $ 1.6 million for the year ended December 31, 2017 relating to the expected return on plan assets. This adjustment is due to the different asset return rates used for IFRS versus U.S. GAAP and has been calculated using the following methodology:


Plan Asset	$	28,699		A
Rate Differential:
Expected rate on plan assets		6.63	%	U.S. GAAP
Weighted average discount rate		1.04	%	IFRS
Difference		5.58	%	B
Calculated difference	$	1,602		A*B

The expected long-term rate of return on pension plan assets was estimated based on the plan’s investment strategy and asset allocation, historical capital market performance, and historical performance.

The tax impact of the pro forma income statement adjustment was estimated using Frutarom’s statutory tax rate in the jurisdictions expected to be impacted.

An adjustment for the three month ended March 31, 2018 has not been calculated since management believes that the adjustment is not material.

No pro forma balance sheet adjustment is required because the amounts recorded for pension assets and obligations will not change materially as a result of purchase accounting.

Note 6 –Pro Forma Adjustments

Adjustments included in the unaudited pro forma condensed combined balance sheet are represented by the following:

Represents the adjustments to record amortization expense related to the increased basis of intangible assets (see Note 4), which have been recorded at estimated fair value on a pro forma basis and will be amortized over the estimated useful lives on a straight line basis as management continues to evaluate the pattern of economic benefits. As part of the preliminary valuation analysis, IFF identified intangible assets related to product formulas, trade name and customer relationships.

The following table summarizes the estimated fair values of Frutarom’s identifiable intangible assets and their estimated useful lives and uses a straight line method of amortization (in USD thousands):


					Amortization expense
	Estimated Fair Value		Estimated Useful Life (in Years)		For the Three Months Ended March 31, 2018		For the Year Ended December 31 2017
Intangible assets
Product formulas		340,000		10		8,500		34,000
Trade name		130,000		20		1,625		6,500
Customer relationships		2,020,000		20		25,250		101,000

		2,490,000				35,375		141,500

Less: Historical amortization expense						6,828		23,676

Pro forma adjustment						28,547		117,824

The estimated tax impact of the fair market value adjustments on the amortization expense is reflected in the statements of operations using the weighted average statutory tax rate of the jurisdictions expected to be impacted.

A 10% change in the valuation of definite lived intangible assets would cause a corresponding increase or decrease in the balance of goodwill and would also cause a corresponding increase or decrease in the annual amortization expense of approximately $14,150.

b)	The pro forma condensed combined balance sheet has been adjusted to reflect the elimination of Frutarom’s historical goodwill of $589,250 and to record goodwill resulting from the merger of $4,250,084. Recorded

goodwill is calculated as the difference between the fair value of the purchase price paid and the preliminary values assigned to the identifiable tangible and intangible assets acquired and liabilities assumed. See Note 4 for the calculation of the amount of preliminary goodwill recognized in connection with the merger.

The pro forma condensed combined balance sheet has been adjusted to step up Frutarom’s inventory to a fair value of approximately $391,000, an increase of $42,202 from the carrying value. This fair value estimate of inventory is preliminary and is determined based on the assumptions that market participants would use in pricing an asset, based on the most advantageous market for the asset (i.e., its highest and best use). This preliminary fair value estimate could include assets that are not intended to be used, may be sold or are intended to be used in a manner other than their best use. The final fair value determination for inventories may differ from this preliminary determination. No adjustment to the unaudited pro forma condensed combined statement of operations has been recorded since the step up of inventory does not have a continuing impact on the combined company.

The pro forma condensed balance sheet has been adjusted to include the adjustment to deferred tax liabilities, on a preliminary basis, of $398,503 resulting from the pro forma fair value adjustments for inventory, intangible assets (excluding goodwill which is not tax deductible), and liabilities utilizing a weighted average statutory rate for the jurisdictions expected to be impacted. Because the tax rate used for these pro forma financial statements is an estimate, it will likely vary from the actual rate in periods subsequent to the completion of the merger and those differences may be material.

The pro forma condensed combined balance sheet has been adjusted to reflect an adjustment of $914,458 to eliminate Frutarom’s historical shareholders’ equity, which represents the historical book value of Frutarom’s net assets, as a result of the merger. The pro forma adjustment to equity also reflects the issue of IFF shares to Frutarom as part of the purchase consideration (Note 3). See table below for more details:


	Reversal of Frutarom’s equity			Issue of IFF’s shares as purchase consideration		Pro forma adjustment
Common Stock		(17,093	)		1,860		(15,233	)
Capital in excess of par value		(115,794	)		1,973,622		1,857,828
Other equity		(781,571	)		—		(781,571	)

Total		(914,458	)		1,975,482		1,061,024

In addition, other pro forma adjustments to other equity include the following adjustments:


	Amount			Tax impact			Pro forma adjustment
Adjustment related to extinguishment of IFF’s debt (Note 6f)		38,591			(8,683	)		29,908
Adjustment related to acquisition related cost (Note 6h)		55,249			—			55,249
Adjustment related to bridge finance commitment fee (Note 6h)		39,800			(9,313	)		30,487
Adjustment related to fair valuation of derivatives (Note 6g)		(546	)		122			(424	)

Total								115,220

IFF expects to finance the merger with a combination of up to $3.2 billion of new debt, cash on hand and up to $2.1 billion in equity. The financing is expected to consist of (i) issuing new par value debt in the form of notes of approximately $2,720 million at a weighted average interest rate of 3.4% per annum with maturities ranging from 2 – 30 years, a portion of which will be denominated in currencies other than the US dollar, (ii) obtaining a new term loan facility of up to $350 million (iii) issuing new Tangible Equity Units (TEU) of approximately $700 million, securities consisting of (a) 3-year prepaid common stock purchase contract of

$595 million and (b) 3-year amortizing bond of $105 million at an interest rate of 5.5%, and (iv) issuance of new common shares for $1,467 million.

Based on the expected structure of the TEUs, IFF expects the TEUs to meet equity classification which has been reflected as such in the unaudited pro forma condensed combined balance sheet. The classification of the TEU will be subject to detailed assessment once finalized and a different conclusion may result in a material impact on these unaudited pro forma condensed combined financial information.

IFF has entered into a debt commitment letter with Morgan Stanley Senior Funding, Inc. to obtain a 364-day bridge facility of up to $5,450 million to the extent IFF does not receive $5,450 million of net cash proceeds from the financing arrangements discussed above. This bridge facility is not expected to be utilized, and thus the fee of the bridge facility financing totaling $39.8 million is not included in the calculation of pro forma interest expense but will be considered an acquisition related cost (see Note 6g). On June 6, 2018, IFF entered into a term loan credit agreement to replace a portion of the bridge facility, reducing the amount of the bridge facility by $350 million. If IFF is not able to consummate the financing discussed above, and instead must utilize the bridge facility to fund the acquisition, the adjustment to annual interest expense is expected to be approximately $48.93 million for the three months ended March 31, 2018 and $195.7 million for the year ended December 31, 2017 respectively.

IFF intends to retire all of Frutarom’s existing debt utilizing funds raised by the expected financing arrangements above. Additionally, in connection with the merger, IFF intends to prepay in full IFF’s current outstanding senior secured notes due 2019-2027. Pursuant to this, IFF will incur certain pre-payment penalties and swap unwind costs. These transactions will be treated as an extinguishment of debt, with a loss of $38.6 million associated with the pre-payment of senior secured notes due 2019-2027 along with swap unwind fee. The loss on extinguishment is reflected in the unaudited pro forma balance sheet as a reduction of retained earnings and a reduction of cash as it will be expensed by IFF. It is not reflected in the pro forma statement of income due to its nonrecurring nature.

The following pro forma adjustments have been recorded in the pro forma condensed combined balance sheet in relation to the new debt (in USD thousands):


	As of March 31, 2018
Term loan		350,000
Senior notes		2,720,000
Debt portion of TEUs		105,000
Debt issuance costs		(22,593	)

Extinguishment of Frutarom’s existing debt		(841,293	)
Repayment of IFF’s existing debt		(250,000	)

Pro forma adjustment		2,061,114

Allocated to:
Short-term borrowings		194,543
Long-term debt		1,866,571

Pro forma adjustment		2,061,114

The following pro forma adjustments have been recorded in the pro forma condensed combined balance sheet in relation to the issuance of equity (in USD thousands):


	Issue of common stock		Equity portion of Tangible equity units		Pro forma adjustment
Common Stock		1,381		—		1,381
Capital in excess of par value		1,423,809		578,043		2,001,852

Total		1,425,190		578,043		2,003,233

The following pro forma adjustments have been recorded the pro forma condensed combined statements of operations (in USD thousands):


	Three Months Ended March 31, 2018			Year Ended December 31, 2017
Interest expense on Term Loan		2,438			12,802
Interest expense TEU notes		1,270			6,631
Interest on Senior Notes		19,765			85,729
Frutarom Interest Expense		(5,800	)		(10,076	)
Retirement of IFF Senior Notes		(4,109	)		(16,437	)

Total pro forma adjustment		13,564			78,649

The weighted-average interest rate on the new term loan, new senior notes and amortizing bond (TEU) as of the issuance is expected to be 3.48%. The actual financing and terms of the financing will be subject to market conditions. A 1/8% change in interest rates on the debt to be incurred as part of the merger would result in a change in interest expense of $3.6 million annually.

IFF entered into deal contingent foreign currency forward contract and interest rate swaps. The deal contingent foreign currency forward serves as an economic hedge of the Euro denominated portion of the senior notes to be issued, while the deal contingent interest rate swaps serve as an economic hedge of the underlying interest rate of the USD denominated senior notes. Upon securing the permanent financing, IFF intends to net settle these derivatives with the financial institutions by making or receiving payment. The foreign currency forward and interest rate swaps have not been considered to be designated as a hedge for the purposes of pro forma financial information. As of July 31, 2018, the foreign currency forward had a fair value of a gain of approximately $10.9 million and the interest rate swaps had a fair value of a loss of approximately $10.4 million. For the purpose of the unaudited pro forma financial statements, recognition of these derivatives have been considered an event that is directly attributable to the merger, however, since these are deal contingent, there is no continuing impact. Accordingly, the pro forma balance sheet has been adjusted to reflect the fair value of these derivatives as July 31, 2018, as if these derivatives were settled on the said date increasing cash and retained earnings. The pro forma adjustments were tax effected using the worldwide weighted average statutory tax rate in the jurisdictions to which the adjustments are expected to relate. No impact on pro forma income statement is considered due its non-recurring nature.

The pro forma condensed combined balance sheet has been adjusted to reflect an adjustment of $95,049 for estimated acquisition-related costs consisting of bridge facility financing fees of $39,800 and professional, legal and other acquisition-related fees of $55,249. Pursuant to the requirements for the preparation of pro forma financial information under Article 11 of Regulation S-X, these acquisition-related costs are not included in the pro forma condensed combined income statements, since these costs are nonrecurring. Acquisition-related costs expected to be incurred by IFF include estimated fees related to the bridge financing commitment letter. Those costs are reflected in the unaudited pro forma condensed combined balance sheet as a decrease to cash and cash equivalents, with the related tax benefits reflected as a decrease in other current liabilities and the after tax impact presented as a decrease to retained earnings.

The pro forma condensed combined income statement has been adjusted for the impact of the adoption of ASU 2017-07—Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, to present the non-service components of periodic pension cost to “Other (income) expense, net” in the pro forma condensed combined income statements.

The estimated tax impact of the interest expense adjustments have been reflected in the pro forma condensed combined income statement using the weighted average statutory tax rate of the jurisdictions expected to be impacted. Because the tax rate used for these pro forma financial statements is an estimate, it will likely vary from the actual rate in periods subsequent to the completion of the business combination and those differences may be material.

k)	Following table summarizes the pro forma adjustments to cash and cash equivalent (in USD thousands):


	Pro Forma adjustment
Proceeds from debt financing (Note 6f)		2,061,114
Proceeds from equity financing (Note 6f)		2,003,233
Prepayment penalty and loss-unwind fee (Note 6f)		(38,591	)
Payment of Acquisition-related cost (Note 6h)		(95,049	)
Net proceeds upon settlement of derivatives (Note 6g)		546

Total		3,931,253

Note 7— Pro Forma Earnings Per Share

The following table presents the calculation of pro forma combined basic and diluted net loss per share of common stock, after giving effect to:

(a)	the preliminary estimated number of shares of IFF common stock to be issued as part of purchase consideration calculated using the exchange ratio

(b)	the preliminary estimated number of shares of IFF common stock to be issued in order to finance the acquisition

(c)	the dilutive impact of equity portion of the tangible equity units

for the year ended December 31, 2017 and the three months ended March 31, 2018 (in USD thousands, except per share amounts):


	Year Ended December 31, 2017		Three Months Ended March 31, 2018
Pro forma net profit attributable to stockholders		288,885		140,203
Weighted average number of IFF shares outstanding - Basic		79,070		79,018
IFF shares issued to Frutarom as part of purchase consideration (Note 3)		14,880		14,880
Fresh equity of common stock to finance the acquisition (Note 6f)		11,050		11,050
Common stock issuable upon conversion of Tangible equity units		4,482		4,482

Pro forma weighted average number shares outstanding - Basic		109,482		109,430

Weighted average number of IFF shares outstanding - Diluted		79,370		79,393
IFF shares issued to Frutarom as part of purchase consideration (Note 3)		14,880		14,880
Fresh equity of common stock to finance the acquisition (Note 6f)		11,050		11,050
Diluted common stock issuable upon conversion of Tangible equity units		5,378		5,378

		110,678		110,701

Pro forma net income per share of common stock – Basic		2.64		1.28
Pro forma net income per share of common stock – Diluted		2.61		1.27

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INTERNATIONAL FLAVORS & FRAGRANCES INC Reports