--- ticker: IFF company: IFF filing_type: 10-K year_current: 2025 year_prior: 2024 risks_added: 0 risks_removed: 4 risks_modified: 9 risks_unchanged: 23 source: SEC EDGAR url: https://riskdiff.com/iff/2025-vs-2024/ markdown_url: https://riskdiff.com/iff/2025-vs-2024/index.md generated: 2026-06-01 --- # IFF: 10-K Risk Factor Changes 2025 vs 2024 > Source: U.S. Securities and Exchange Commission (EDGAR) > Generated: 2026-06-01 > All data extracted directly from official filings. No hallucinated content. ## Summary | Status | Count | |--------|-------| | New risks added | 0 | | Risks removed | 4 | | Risks modified | 9 | | Unchanged | 23 | --- ## No Match in Current: International conflicts (such as the Russia-Ukraine war and Israel-Hamas war), geopolitical events, natural disasters, public health crises (such as the COVID-19 pandemic), trade wars, terrorist acts, labor strikes, political or economic crises (such as uncertainty related to protracted U.S. federal government funding negotiations), accidents and other events could adversely affect our business and financial results, including by disrupting development, manufacturing, distribution or sale of our products. *This section from the 2024 filing does not have a high-confidence textual match in 2025. It may have been removed, merged, or substantially reworded.* As a company engaged in the global development, manufacture and distribution of products, we are subject to the risks inherent in such activities, including industrial accidents, environmental events, strikes and other labor disputes, product quality control issues, safety, licensing requirements and other regulatory issues, as well as natural disasters, public health crises, such as pandemics or epidemics, international conflicts, geopolitical events, trade wars, terrorist acts, political or economic crises (such as the uncertainty related to protracted U.S. federal government funding negotiations) and other external factors over which we have no control. See, also " - Supply chain disruptions, geopolitical developments, including the Russia-Ukraine war, the Israel-Hamas war and wider Middle East developments (including disruptions to the Red Sea passage), or climate-change events (including severe weather events) may adversely affect our suppliers or our procurement of raw materials, and thus may impact our business and financial results." For instance, the Russia-Ukraine war has adversely impacted and may continue to impact, among other things, certain of our local markets and suppliers, global and local macroeconomic conditions, foreign exchange rates and financial markets, raw material, energy and transportation costs, and cause further supply chain disruptions. We maintain operations in both Russia and Ukraine and export products to customers in Russia and Ukraine from operations outside the region. In response to the events in Ukraine, the Company has limited the production and supply of ingredients in and to Russia to only those that meet the essential needs of people, including food, hygiene and medicine. As a result of changes and uncertainties arising out of the Russia-Ukraine war, our operating performance in Russia remains lower compared 19 19 19 Table of Contents Table of Contents to previous years and may not reverse in the near future. The Israel-Hamas war may also have impacts on our operations in Israel and certain of our customers, local markets and suppliers. While we operate research and development, manufacturing and distribution facilities throughout the world, many of these facilities are extremely specialized and certain of our research and development or creative laboratories facilities are uniquely situated to support our research and development efforts while certain of our manufacturing facilities are the sole location where a specific ingredient or product is produced. If our research and development activities or the manufacturing of ingredients or products were disrupted, the cost of relocating or replacing these activities or reformulating these ingredients or products may be substantial, which could result in production or development delays or otherwise have an adverse effect on our margins, operating results and future growth. Moreover, as a result of the COVID-19 pandemic's impact on the global supply chain, we have experienced, and may continue to experience, increased costs, delays or limited availability related to raw materials, strain on shipping and transportation resources, and higher energy prices, which have negatively impacted and may continue to negatively impact, our margins and operating results. Although we do not currently anticipate any impairment charges related to COVID-19, the continuing effects of the pandemic could result in increased risks to us of asset write-downs and impairments, including, but not limited to, property, plant and equipment, goodwill and other intangibles, and equity investments. Any of these events or factors could potentially result in a material adverse impact on our business and results of operations. --- ## No Match in Current: The integration of the N&B Business may continue to present significant challenges, and we may not realize anticipated synergies and other benefits of the N&B Transaction. *This section from the 2024 filing does not have a high-confidence textual match in 2025. It may have been removed, merged, or substantially reworded.* The combination of large, diverse and independent businesses is complex, costly and time-consuming. The combination with the N&B Business may result in material unanticipated problems, expenses, liabilities, competitive responses, employee turnover and loss of customer and other business relationships. In addition, even though the operations of the N&B Business are being integrated, the full benefits of the transaction may not be realized, including, among others, the synergies, cost savings or revenue growth that are expected. These benefits may not be achieved within the anticipated time frame or at all, which could result in a material adverse impact on our business and results of operations. --- ## No Match in Current: If we are unable to react in a timely and cost-effective manner to changes in consumer trends, such as increasing awareness of health and wellness our results of operations and future growth may be adversely affected. *This section from the 2024 filing does not have a high-confidence textual match in 2025. It may have been removed, merged, or substantially reworded.* We must continually anticipate and react, in a timely and cost-effective manner, to changes in consumer preferences and demands, including changes in demand driven by increasing awareness of health and wellness, demands for transparency or cleaner labels with respect to product ingredients by consumers and regulators, and attitudes towards the impact of biotechnology advances such as gene editing and mapping. Consumers, especially in developed economies such as the U.S. and Western Europe, are rapidly shifting away from products containing artificial ingredients to all-natural, healthier alternatives, and the development of certain new weight management pharmaceutical products such as glucagon-like peptide-1 (GLP-1) receptor agonists may affect consumer behavior and trends, and ultimately decrease demand for our product offerings. In addition, there has been a growing demand by consumers, non-governmental organizations and, to a lesser extent, governmental agencies to provide more transparency in product labeling and our customers have been taking steps to address this demand, including by voluntarily providing product-specific ingredients disclosure. These trends could affect the types and volumes of our ingredients and compounds that our customers include in their consumer product offerings and, therefore, affect the demand for our products. If we are unable to react to or anticipate these trends in a timely and cost-effective manner, our results of operations and future growth may be adversely affected. --- ## No Match in Current: The phase out of the London Interbank Offered Rate ("LIBOR") may impact the interest rates paid on our variable rate indebtedness and could cause our interest expense to increase. *This section from the 2024 filing does not have a high-confidence textual match in 2025. It may have been removed, merged, or substantially reworded.* After consultations among financial regulators in the United States and Europe, the Secured Overnight Financing Rate ("SOFR") was identified as the replacement rate for LIBOR, which ceased publication in June 2023. SOFR is observed and backward-looking, which stands in contrast with LIBOR's methodology, which was an estimated forward-looking rate and relied, to some degree, on the expert judgment of submitting panel members. Given that SOFR is a secured rate backed by government securities, it is a rate that does not take into account bank credit risk (as was the case with LIBOR). SOFR is a relatively new reference rate with a limited history and so it is difficult to predict its future performance. As such, the transition from LIBOR to SOFR may pose future uncertainties and challenges. Borrowings under our Revolving Credit Facility and Term Loans are at variable interest rates and have been amended to be based on SOFR. No assurance can be made that such alternative rate will perform in a manner similar to LIBOR and may result in interest rates that are higher or lower than those that would have resulted had LIBOR remained in effect. Any of these occurrences could materially and adversely affect our borrowing costs, financial condition and results of operations. 25 25 25 Table of Contents Table of Contents --- ## Modified: Risk Factor Summary **Key changes:** - Reworded sentence: "11 11 11 Table of Contents Table of Contents •If we are unable to successfully execute our strategic transformation, including our portfolio optimization, it may have a material adverse effect on our business, results of operations and financial condition." - Reworded sentence: "•Our performance may be adversely impacted if we are not successful in managing our inventory and/or working capital balances." - Reworded sentence: "•A significant data breach or other disruption to our information technology systems could disrupt our operations, resulting in the loss of confidential information or personal data, and adversely impact our reputation, productivity, business or results of operations." - Reworded sentence: "•We are subject to increasing customer, consumer, shareholder and regulatory focus on sustainability, which may result in additional costs in order to meet new requirements, including adversely affecting our stock price, results of operations and access to capital." - Removed sentence: "•If we fail to successfully enter into or close collaborations, joint ventures, partnerships or acquisitions, or successfully manage such transactions, it could adversely affect our business and growth opportunities." **Prior (2024):** The following summary highlights some of the principal risks that could adversely affect our business, financial condition or results of operations. This summary is not complete and the risks summarized below are not the only risks we face. These risks are discussed more fully further below in this section entitled "Risk Factors" in Item 1A. of this report. These risks include, but are not limited to, the following: •We have a substantial amount of indebtedness that could materially adversely affect, among other things, our financial condition, our ability to return capital to our shareholders, needed investments into our business, and our credit ratings. •If we are unable to successfully execute the next phase of our strategic transformation, including our portfolio optimization, it may have a material adverse effect on our business, results of operations and financial condition. •Our ability to declare and pay dividends is subject to certain considerations. •Our results of operations may be negatively impacted by the outcome of uncertainties related to legal claims, disputes, investigations and litigation, including the ongoing antitrust and competition investigations and related class actions lawsuits. •Inflationary trends and pricing uncertainty, including in the price of our input costs, such as raw materials, transportation and energy, could adversely affect our business and financial results in the short term and result in uncertainties in the long term. •Supply chain disruptions, geopolitical developments, including the Russia-Ukraine war, the Israel-Hamas war and wider Middle East developments (including disruptions to the Red Sea passage or such conflicts spreading further in the relevant regions), or climate-change events (including severe weather events) may adversely affect our suppliers or our procurement of raw materials, and thus may impact our business and financial results. •Our success depends on attracting and retaining talented people within our business and our management team. Changes to management, including turnover of our top executives, and significant shortfalls in recruitment, retention or transition of employees or our management team could adversely affect our ability to compete and achieve our strategic goals. 12 12 12 Table of Contents Table of Contents •If we are unable to successfully market to our expanded and diverse customer base, our operating results and future growth may be adversely affected. •Our business is highly competitive, and if we are unable to compete effectively our sales and results of operations will suffer. •A significant portion of our sales is generated from a limited number of large multi-national customers, which are currently under competitive pressures that may affect the demand for our products and profitability. •We may not successfully develop and introduce new products that meet our customers' needs, which may adversely affect our results of operations. •International conflicts (such as the Russia-Ukraine war and the Israel-Hamas war), geopolitical events, natural disasters, public health crises (such as the COVID-19 pandemic), trade wars, terrorist acts, labor strikes, political or economic crises (such as uncertainty related to protracted U.S. federal government funding negotiations), accidents and other events could adversely affect our business and financial results, including by disrupting development, manufacturing, distribution or sale of our products. •A significant data breach or other disruption to our information technology systems could disrupt our operations, result in the loss of confidential information or personal data, and adversely impact our reputation, business or results of operations. •We are subject to risks associated with the potential use of artificial intelligence ("AI") in our own operations and by third-party partners that we may engage with. •We have made investments in and continue to expand our business into emerging markets, which exposes us to certain risks. •The impact of currency fluctuation or devaluation in the international markets in which we operate may negatively affect our results of operations. •International economic, political, legal, compliance and business factors could negatively affect our financial statements, operations and growth. •Economic uncertainty, including increased inflation, may adversely affect demand for our products which may have a negative impact on our operating results and future growth. •The integration of the N&B Business may continue to present significant challenges, and we may not realize anticipated synergies and other benefits of the N&B Transaction. •If we are unable to react in a timely and cost-effective manner to changes in consumer trends, such as increasing awareness of health and wellness, our results of operations and future growth may be adversely affected. •We are subject to increasing customer, consumer, shareholder and regulatory focus on sustainability, which may result in additional costs in order to meet new requirements. •Our performance may be adversely impacted if we are not successful in managing our inventory and/or working capital balances. •Any impairment of our tangible or intangible long-lived assets, including goodwill, may adversely impact our profitability. •If we fail to successfully enter into or close collaborations, joint ventures, partnerships or acquisitions, or successfully manage such transactions, it could adversely affect our business and growth opportunities. •Our funding obligations for our pension and postretirement plans could adversely affect our earnings and cash flows. •The phase out of the London Interbank Offered Rate ("LIBOR") may impact the interest rates paid on our variable rate indebtedness and could cause our interest expense to increase. •If we are unable to comply with regulatory requirements and industry standards, including those regarding product safety, quality, efficacy and environmental impact, we could incur significant costs and suffer reputational harm which could adversely affect results of operations. •Defects, quality issues (including product recalls), inadequate disclosure or misuse with respect to the products and capabilities could adversely affect our business, reputation and results of operations. •Failure to comply with environmental protection laws may cause us to close, relocate or operate one or more of our plants at reduced production levels, and expose us to civil or criminal liability, which could adversely affect our operating results and future growth. •We could be adversely affected by violations, by us or our counterparties, of the U.S. Foreign Corrupt Practices Act, similar U.S. or foreign anti-bribery and anti-corruption laws and regulations, applicable sanctions laws and regulations in the jurisdictions in which we operate or ethical business practices and related laws and regulations. •Our ability to compete effectively depends on our ability to protect our intellectual property rights. 13 13 13 Table of Contents Table of Contents •Changes in our tax rates, the adoption of new U.S. or international tax legislation, or changes in existing tax laws could expose us to additional tax liabilities that may affect our future results. •The N&B Transaction could result in significant tax liability, and we may be obligated to indemnify DuPont for any such tax liability imposed on DuPont. •If we fail to comply with data protection laws in the U.S. and abroad, we may be subject to fines, penalties and other costs. **Current (2025):** The following summary highlights some of the principal risks that could adversely affect our business, financial condition or results of operations. This summary is not complete and the risks summarized below are not the only risks we face. These risks are discussed more fully further below in this section entitled "Risk Factors" in Item 1A. of this report. These risks include, but are not limited to, the following: •We have a substantial amount of indebtedness that could materially adversely affect, among other things, our financial condition, our ability to return capital to our shareholders, needed investments into our business, and our credit ratings. 11 11 11 Table of Contents Table of Contents •If we are unable to successfully execute our strategic transformation, including our portfolio optimization, it may have a material adverse effect on our business, results of operations and financial condition. •Regulatory, consumer and economic trends may result in significant costs or adversely affect demand for our products which may have a negative impact on our operating results and future growth. •Our results of operations may be negatively impacted by the outcome of uncertainties related to legal claims, disputes, investigations and litigation, including the ongoing antitrust and competition investigations and related class action lawsuits. •Supply chain disruptions, geopolitical developments, climate-change events, natural disasters, public health crises, tariffs and trade wars, and other events may adversely affect our business, our procurement of raw materials, and our development, manufacturing, distribution or sale of our products, and thus may impact our productivity, business and financial results. •Inflationary trends and pricing uncertainty, including in the price of our input costs, such as raw materials, transportation and energy, could adversely affect our business and financial results in the short term and result in uncertainties in the long term. •Our performance may be adversely impacted if we are not successful in managing our inventory and/or working capital balances. •Our business is highly competitive, and if we are unable to compete effectively our sales and results of operations will suffer. •A significant portion of our sales is generated from a limited number of large multi-national customers, which are currently under competitive pressures that may affect the demand for our products and profitability. •We may not successfully develop and introduce new products that meet our customers' needs, which may adversely affect our results of operations. •A significant data breach or other disruption to our information technology systems could disrupt our operations, resulting in the loss of confidential information or personal data, and adversely impact our reputation, productivity, business or results of operations. •We are subject to risks associated with the potential use of AI in our own operations and by third-party partners that we may engage with. •We have made investments in and continue to expand our business into emerging markets, which exposes us to certain risks. •The impact of currency fluctuation or devaluation in the international markets in which we operate may negatively affect our results of operations. •International economic, political, legal, compliance and business factors could negatively affect our financial statements, operations and growth. •We are subject to increasing customer, consumer, shareholder and regulatory focus on sustainability, which may result in additional costs in order to meet new requirements, including adversely affecting our stock price, results of operations and access to capital. •If we fail to successfully enter into or close collaborations, joint ventures, partnerships, acquisitions, or divestitures, or successfully manage such transactions, it could adversely affect our business and growth opportunities. •Our ability to declare and pay dividends is subject to certain considerations. •Our success depends on attracting and retaining talented people within our business and our management team. Changes to management, including turnover of our top executives, and significant shortfalls in recruitment, retention or transition of employees or our management team could adversely affect our ability to compete and achieve our strategic goals. •If we are unable to successfully market to our expanded and diverse customer base, our operating results and future growth may be adversely affected. •Any impairment of our tangible or intangible long-lived assets, including goodwill, may adversely impact our profitability. •Our funding obligations for our pension and postretirement plans could adversely affect our earnings and cash flows. •If we are unable to comply with regulatory requirements and industry standards, including those regarding product safety, quality, efficacy and environmental impact, we could incur significant costs and suffer reputational harm which could adversely affect results of operations. •Defects, quality issues (including product recalls), inadequate disclosure or misuse with respect to the products and capabilities could adversely affect our business, reputation and results of operations. 12 12 12 Table of Contents Table of Contents •Failure to comply with environmental protection laws may cause us to close, relocate or operate one or more of our plants at reduced production levels, and expose us to civil or criminal liability, which could adversely affect our operating results and future growth. •We could be adversely affected by violations, by us or our counterparties, of U.S. or foreign anti-bribery and anti-corruption laws and regulations, applicable sanctions or competition laws and regulations in the jurisdictions in which we operate or ethical business practices and related laws and regulations. •Our ability to compete effectively depends on our ability to protect our intellectual property rights. •Changes in our tax rates, the adoption of new U.S. or international tax legislation, or changes in existing tax laws could expose us to additional tax liabilities that may affect our future results. •The N&B Transaction could result in significant tax liability, and we may be obligated to indemnify DuPont for any such tax liability imposed on DuPont. •If we fail to comply with data protection laws in the U.S. and abroad, we may be subject to fines, penalties and other costs. --- ## Modified: Changes in our tax rates, the adoption of new U.S. or international tax legislation, or changes in existing tax laws could expose us to additional tax liabilities that may affect our future results. **Key changes:** - Reworded sentence: "Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in liabilities for uncertain tax positions, cost of repatriations or changes in tax laws or their interpretation." - Reworded sentence: "In addition, a number of international legislative and regulatory bodies have proposed legislation and conducted investigations of the tax practices of multi-national companies and, in the European Union, the tax policies of certain European Union member states." - Reworded sentence: "The rules are being passed into national legislation based on each country's approach, and some countries have already enacted or substantively enacted the rules." - Reworded sentence: "government enacted legislation commonly referred to as the "Inflation Reduction Act", which, among other things, imposed a minimum "book" tax on certain corporations effective for taxable years beginning after December 31, 2022 and created a new excise tax on stock repurchases made by certain publicly traded corporations after December 31, 2022." **Prior (2024):** We are subject to taxes in the U.S. and numerous foreign jurisdictions. Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and 28 28 28 Table of Contents Table of Contents liabilities, changes in liabilities for uncertain tax positions, cost of repatriations or changes in tax laws or their interpretation. Any of these changes could have a material adverse effect on our profitability. We have and will continue to implement transfer pricing policies among our various operations located in different countries. These transfer pricing policies are a significant component of the management and compliance of our operations across international boundaries and overall financial results. Many countries routinely examine transfer pricing policies of taxpayers subject to their jurisdiction, challenge transfer pricing policies aggressively where there is potential non-compliance and impose significant interest charges and penalties where non-compliance is determined. However, governmental authorities could challenge these policies more aggressively in the future and, if challenged, we may not prevail. We could suffer significant costs related to one or more challenges to our transfer pricing policies. We are subject to the continual examination of our income tax returns by the Internal Revenue Service, state tax authorities and foreign tax authorities in those countries in which we operate, and may be subject to assessments or audits in the future in any of the countries in which we operate. The final determination of tax audits and any related litigation could be materially different from our historical income tax provisions and accruals, and while we do not believe the results that follow would have a material adverse effect on our financial condition, such results could have a material effect on our income tax provision, net income or cash flows in the period or periods in which that determination is made. In addition, a number of international legislative and regulatory bodies have proposed legislation and begun investigations of the tax practices of multi-national companies and, in the European Union, the tax policies of certain European Union member states. In December 2021, the Organisation for Economic Co-operation and Development ("OECD") released the Pillar Two model rules to reform international corporate taxation that aim to ensure that applicable multinationals (global revenue exceeding €750 million) pay a minimum effective corporate tax rate of 15%. The rules are due to be passed into national legislation based on each country's approach, and some countries have already enacted or substantively enacted the rules. The OECD continues to release additional guidance on the Two-Pillar framework, with widespread implementation anticipated by 2024. We are continuing to evaluate the potential impact on future periods of the Pillar Two Framework, pending legislative adoption by individual countries. This new legislation may have a material effect on our effective tax rate, income tax expense, net income or cash flows. Since 2013, the European Commission ("EC") has been investigating tax rulings granted by tax authorities in a number of European Union member states with respect to specific multi-national corporations to determine whether such rulings comply with European Union rules on state aid, as well as more recent investigations of the tax regimes of certain European Union member states. Under European Union law, selective tax advantages for particular taxpayers that are not sufficiently grounded in economic realities may constitute impermissible state aid. If the EC determines that a tax ruling or tax regime violates the state aid restrictions, the tax authorities of the affected European Union member state may be required to collect back taxes for the period of time covered by the ruling. If the EC or tax authorities in other jurisdictions were to successfully challenge tax rulings applicable to us in any of the member states in which we are subject to taxation or our internal intercompany arrangements, we could be exposed to increased tax liabilities. In August 2022, the U.S. government enacted legislation commonly referred to as the "Inflation Reduction Act", which, among other things, imposes a minimum "book" tax on certain corporations effective for taxable years beginning after December 31, 2022 and creates a new excise tax on stock repurchases made by certain publicly traded corporations after December 31, 2022. We will continue to evaluate its impact as further guidance becomes available. **Current (2025):** We are subject to taxes in the U.S. and numerous foreign jurisdictions. Our future effective tax rates could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, changes in liabilities for uncertain tax positions, cost of repatriations or changes in tax laws or their interpretation. Any of these changes could have a material adverse effect on our profitability. We have and will continue to implement transfer pricing policies among our various operations located in different countries. These transfer pricing policies are a significant component of the management and compliance of our operations across international boundaries and overall financial results. Many countries routinely examine transfer pricing policies of taxpayers subject to their jurisdiction, challenge transfer pricing policies aggressively where there is potential non-compliance and impose significant interest charges and penalties where non-compliance is determined. However, governmental authorities could challenge these policies more aggressively in the future and, if challenged, we may not prevail. We could suffer significant costs related to one or more challenges to our transfer pricing policies. We are subject to the continual examination of our income tax returns by the Internal Revenue Service, state tax authorities and foreign tax authorities in those countries in which we operate, and may be subject to assessments or audits in the future in any of the countries in which we operate. The final determination of tax audits and any related litigation could be materially different from our historical income tax provisions and accruals, and while we do not believe the results that follow would have a material adverse effect on our financial condition, such results could have a material effect on our income tax provision, net income or cash flows in the period or periods in which that determination is made. In addition, a number of international legislative and regulatory bodies have proposed legislation and conducted investigations of the tax practices of multi-national companies and, in the European Union, the tax policies of certain European Union member states. In December 2021, the Organisation for Economic Co-operation and Development ("OECD") released the Pillar Two model rules to reform international corporate taxation that aim to ensure that applicable multinationals (global revenue exceeding €750 million) pay a minimum effective corporate tax rate of 15%. The rules are being passed into national legislation based on each country's approach, and some countries have already enacted or substantively enacted the rules. A framework on Safe Harbours and Penalty Relief was released in 2022 providing details on the transitional reliefs available to businesses over the initial years of Pillar Two implementation. The OECD released administrative guidance in February 2023 aiming to provide clarity over contentious areas of the model rules and aiming to provide greater certainty for businesses impacted by Pillar Two. We continuously evaluate these developments and the potential impact of the Pillar Two framework, subject to legislative adoption by individual countries. This legislation may have a material effect on our effective tax rate, income tax expense, net income or cash flows. The European Commission ("EC") is continuously investigating tax rulings in a number of European Union member states, including with respect to specific multi-national corporations to determine whether such rulings comply with European Union rules on state aid. Under European Union law, selective tax advantages for particular taxpayers that are capable of distorting competition and affecting trade between member states may constitute impermissible state aid. If the EC determines that a tax 27 27 27 Table of Contents Table of Contents ruling or an implemented tax regime violates the state aid restrictions, the tax authorities of the affected European Union member state may be required to collect back taxes for the period of time covered by the ruling. If the EC, tax authorities or other interested parties in other jurisdictions were to successfully challenge tax rulings applicable to us in any of the member states in which we are subject to taxation or our internal intercompany arrangements, we could be exposed to increased tax liabilities or less favorable tax regimes. In addition, a new European Union regulation - the Foreign Subsidy Regulation - has been recently introduced to address distortions in the European Union market caused by foreign subsidies (including favorable tax regimes) granted by non-EU States to companies active in the European Union. The European Union regulation imposes notification requirements, and also empowers the EC to investigate such potential distortions. Should the EC determine that foreign subsidies have been granted to us capable of distorting competition within the EU, the Company may be exposed to penalties and other costs. In August 2022, the U.S. government enacted legislation commonly referred to as the "Inflation Reduction Act", which, among other things, imposed a minimum "book" tax on certain corporations effective for taxable years beginning after December 31, 2022 and created a new excise tax on stock repurchases made by certain publicly traded corporations after December 31, 2022. We continue to evaluate its impact as further guidance becomes available. --- ## Modified: If we fail to successfully enter into or close collaborations, joint ventures, partnerships, acquisitions, or divestitures, or successfully manage such transactions, it could adversely affect our business and growth opportunities. **Key changes:** - Reworded sentence: "21 21 21 Table of Contents Table of Contents From time to time, we evaluate and enter into collaborations, joint ventures or partnerships to enhance our research and development efforts, expand our product portfolios and technology, or modify or enter into new distribution arrangements." - Reworded sentence: "We may not be able to successfully negotiate such arrangements, the terms of the arrangements may not be as favorable as anticipated, or such arrangements may result in commercial or legal disputes post-closing." - Reworded sentence: "In addition, from time to time, we have acquired, and we may acquire, only a majority or partial interest in companies and provided or may provide earnouts for the former owners along with the ability, at our option, or obligation, at the former owners' option, to purchase the minority interests at a future date at an established price." - Reworded sentence: "If we are unable to successfully establish and manage these collaborative relationships and investments, it could adversely affect our future growth." - Added sentence: "Likewise, from time to time, we conduct divestiture transactions relating to certain of our businesses or assets." **Prior (2024):** From time to time, we evaluate and enter into collaborations, joint ventures or partnerships to enhance our research and development efforts, expand our product portfolios and technology, or modify or enter into new distribution arrangements. The process of establishing and maintaining such relationships is difficult and time-consuming to negotiate, document and implement. We may not be able to successfully negotiate such arrangements or the terms of the arrangements may not be as favorable as anticipated. Furthermore, our ability to generate revenues from such collaborations will depend on our partners' abilities and efforts to successfully perform the functions assigned to them in these arrangements and these collaborations may not lead to development or commercialization of products in the most efficient manner, or at all. In addition, from time to time, we have acquired, and we may acquire, only a majority interest in companies and provided or may provide earnouts for the former owners along with the ability, at our option, or obligation, at the former owners' option, to purchase the minority interests at a future date at an established price. These investments may have additional risks and may not be as efficient as other operations as we may have fiduciary or contractual obligations to the minority investors and may rely on former owners for the continuing operation of the acquired business. If we are unable to successfully establish and manage these collaborative relationships and majority investments, it could adversely affect our future growth. In addition, from time to time, we evaluate acquisition candidates that may strategically fit our business and/or growth objectives. If we are unable to successfully integrate and develop acquired businesses, we could fail to achieve anticipated synergies and cost savings, including any expected increase in revenues and operating results, which could have a material adverse effect on our financial results. Furthermore, even if successfully integrated, the acquisition target may fail to further the Company's business strategy as anticipated, expose the Company to increased competition or other challenges with respect to the Company's products or geographic markets, and expose the Company to additional liabilities associated with the acquired business, technology or other asset or arrangement. We may also incur asset impairment charges related to acquisitions if we fail to maintain and integrate the acquired businesses and such impairments charges would reduce our earnings. **Current (2025):** 21 21 21 Table of Contents Table of Contents From time to time, we evaluate and enter into collaborations, joint ventures or partnerships to enhance our research and development efforts, expand our product portfolios and technology, or modify or enter into new distribution arrangements. The process of establishing and maintaining such relationships is difficult and time-consuming to negotiate, document and implement. We may not be able to successfully negotiate such arrangements, the terms of the arrangements may not be as favorable as anticipated, or such arrangements may result in commercial or legal disputes post-closing. Furthermore, our ability to generate revenues from such collaborations will depend on our partners' abilities and efforts to successfully perform the functions assigned to them in these arrangements and these collaborations may not lead to development or commercialization of products in the most efficient manner, or at all. In addition, from time to time, we have acquired, and we may acquire, only a majority or partial interest in companies and provided or may provide earnouts for the former owners along with the ability, at our option, or obligation, at the former owners' option, to purchase the minority interests at a future date at an established price. These investments may have additional risks and may not be as efficient as other operations as we may have fiduciary or contractual obligations to the minority investors and may rely on former owners for the continuing operation of the acquired business. If we are unable to successfully establish and manage these collaborative relationships and investments, it could adversely affect our future growth. In addition, from time to time, we evaluate acquisition candidates and conduct acquisitions that may strategically fit our business, our growth or productivity objectives. If we are unable to successfully identify and acquire such candidates or integrate and develop acquired businesses, we could fail to achieve anticipated synergies and cost savings, productivity gains, including any expected increase in revenues and operating results, which could have a material adverse effect on our financial results. Furthermore, even if successfully integrated, the acquisition target may fail to further the Company's business strategy as anticipated, and expose the Company to additional liabilities associated with the acquired business, technology or other asset or arrangement. Conducting acquisitions also creates additional risks, including the potential of incremental liabilities or failing to adequately mitigate or address risks in an acquisition agreement, or potential other post-closing disputes. We may also incur asset impairment charges related to acquisitions if we fail to maintain and integrate the acquired businesses and such impairments charges would reduce our earnings. Likewise, from time to time, we conduct divestiture transactions relating to certain of our businesses or assets. In conducting such transactions, we enter into a process and execute agreements which could create incremental liabilities and exposures relating to the divested businesses or assets, as well as risks associated with enforcing such agreements. See, also " - If we are unable to successfully execute our strategic transformation, including our portfolio optimization, it may have a material adverse effect on our business, results of operations and financial condition." --- ## Modified: We are subject to risks associated with the potential use of AI in our own operations and by third-party partners that we may engage with. **Key changes:** - Reworded sentence: "IFF has been increasingly using or considering using AI tools in its operations, research and development and other areas." - Added sentence: "Additionally, the use of AI may lead to the weakening or loss of intellectual property rights, where AI-generated inventions or creations may not be properly attributed to the rightful inventors, potentially resulting in disputes over intellectual property ownership and inventorship rights." - Added sentence: "Further, the use of AI to draft patent applications may lead to inaccuracies or omissions in the applications, potentially resulting in weakened patent protection or possible outright rejection based on intellectual property ownership and inventorship." - Reworded sentence: "See " - A significant data breach or other disruption to our information technology systems could disrupt our operations, result in the loss of confidential information or personal data, and adversely impact our reputation, productivity, business or 19 19 19 Table of Contents Table of Contents results of operations." With new and evolving AI comes a continually changing AI regulatory environment, which may create additional compliance costs and risks." **Prior (2024):** Recent technological advances in AI come with significant risks related to its use across many industries, including our own. IFF may be exposed to such risks in cases where IFF utilizes AI in connection with certain business activities now or in the future, in cases where, whether known or unknown to IFF, IFF personnel, use AI for our business or at IFF locations, or in cases where our third-party partners, whether or not known to IFF, use AI in their business activities (which we may not be in a position to control). The use of AI by us, our employees or any of our third-party partners may result in unauthorized disclosure of personal data, proprietary information and trade secrets, commercially sensitive or confidential information of IFF, our employees or our partners. Similarly, we may become, through the use of AI and unbeknownst to us, recipients or users of such information provided by other parties, which may enable, among other things, third parties to claim that we infringed on their intellectual property rights. Such unauthorized disclosures or uses of information can result, among other things, in reputational harm, loss of confidence by our customers or employees, penalties, litigation costs, or legal liability. Analyses, results or business processes relying on AI may also be deficient, inaccurate, or biased and we may fail to identify in a timely fashion or at all, if or to the extent that is the case. Furthermore, AI can exacerbate our cybersecurity or IT risks. See "--A significant data breach or other disruption to our information technology systems could disrupt our operations, result in the loss of confidential information or personal data, and adversely impact our reputation, business or results of operations." With new and evolving AI comes a continually changing AI regulatory environment, which may create additional compliance costs and risks. At the same time, AI has the potential to significantly change the way we do our business by, among other things, creating efficiencies, improving our processes, customer experience, talent management and our decision-making. Any failure to capitalize on the AI benefits to the same degree or with the same speed as our competitors may put us in a disadvantageous position. If we are unable to successfully manage these risks, it may have a material adverse effect on our business, results of operations and financial condition. **Current (2025):** IFF has been increasingly using or considering using AI tools in its operations, research and development and other areas. Many of our third-party partners also utilize or are considering utilizing certain AI tools. IFF may be exposed to risks in cases where IFF utilizes AI in connection with certain business activities now or in the future, in cases where, whether known or unknown to IFF, IFF personnel, use AI for our business or at IFF locations, or in cases where our third-party partners, whether or not known to IFF, use AI in their business activities (which we may not be in a position to control). The use of AI by us, our employees or any of our third-party partners may result in unauthorized disclosure of personal data, proprietary information and trade secrets, commercially sensitive or confidential information of IFF, our employees or our partners. Similarly, we may become, through the use of AI and unbeknownst to us, recipients or users of such information provided by other parties, which may enable, among other things, third parties to claim that we infringed on their intellectual property rights. Such unauthorized disclosures or uses of information can result, among other things, in reputational harm, loss of confidence by our customers or employees, penalties, litigation costs, or legal liability. Additionally, the use of AI may lead to the weakening or loss of intellectual property rights, where AI-generated inventions or creations may not be properly attributed to the rightful inventors, potentially resulting in disputes over intellectual property ownership and inventorship rights. Further, the use of AI to draft patent applications may lead to inaccuracies or omissions in the applications, potentially resulting in weakened patent protection or possible outright rejection based on intellectual property ownership and inventorship. Analyses, results or business processes relying on AI may also be deficient, inaccurate, or biased and we may fail to identify in a timely fashion or at all, if or to the extent that is the case. Furthermore, AI can exacerbate our cybersecurity or IT risks. See " - A significant data breach or other disruption to our information technology systems could disrupt our operations, result in the loss of confidential information or personal data, and adversely impact our reputation, productivity, business or 19 19 19 Table of Contents Table of Contents results of operations." With new and evolving AI comes a continually changing AI regulatory environment, which may create additional compliance costs and risks. At the same time, AI is already changing and has the potential to further significantly change the way we or our competitors do business by, among other things, accelerating research and development, creating efficiencies, improving supply chain, productivity and other processes, customer experience, talent management and decision-making. Any failure to capitalize on the AI benefits to the same degree or with the same speed as our competitors may put us in a disadvantageous position and render our intellectual property portfolio less valuable. If we are unable to successfully manage these risks, it may have a material adverse effect on our business, results of operations and financial condition. --- ## Modified: Our success depends on attracting and retaining talented people within our business and our management team. Changes to management, including turnover of our top executives, and significant shortfalls in recruitment, retention or transition of employees or our management team could adversely affect our ability to compete and achieve our strategic goals. **Key changes:** - Reworded sentence: "The ability to attract and retain talented 22 22 22 Table of Contents Table of Contents employees is critical in, among other things, meeting productivity goals as well as the development of new products and technologies, which is an integral component of our growth strategy." - Reworded sentence: "Changing worker and talent market expectations around flexible work models and relocation has also impacted our ability to retain talent." - Reworded sentence: "We may not find an adequate replacement in a timely fashion, or at all and any replacement may view the business differently than current members of management." - Removed sentence: "Lastly, our success may depend on the ability of our new Chief Executive Officer to integrate and quickly adapt to and understand our business, operations, and strategic plans." - Removed sentence: "This will be critical to the Company and our management's ability to make informed decisions about our near-term strategic direction and operations." **Prior (2024):** Attracting, developing, and retaining talented employees is essential to the successful delivery of our products and has become more difficult and costly in the current labor market. Furthermore, as we continue to focus on innovation, our need for scientists and other professionals will increase and may result in increased labor costs. The ability to attract and retain talented employees is critical in the development of new products and technologies which is an integral component of our growth strategy. Competition for employees can be intense and if we are unable to successfully integrate, motivate and reward our employees, we may not be able to retain them. If we are unable to retain our employees or attract new employees in the future, our ability to effectively compete with our competitors and to grow our business could be adversely affected. In addition, we have announced, as part of our strategic transformation initiatives, certain headcount reductions to re-align our workforce to match strategic and financial objectives and optimize resources for long-term growth. Such reductions could lead to increased uncertainty, attrition or lower morale amongst those employees who are not directly affected by the headcount reductions as those reductions are being implemented, which may result in decreased productivity or could otherwise impact our results of operation. In addition, the loss of any member of our senior management could materially adversely affect our ability to execute our business plan and strategy. We may not find an adequate replacement in a timely fashion, or at all and any replacement may 17 17 17 Table of Contents Table of Contents view the business differently than current members of management. Future executives may make changes to our strategic focus, operations, business plans or financial guidance and outlook, with corresponding changes in how we report our results of operations. We can make no assurances that we would be able to properly manage any shift in focus or that any changes to our business would ultimately prove successful. Lastly, our success may depend on the ability of our new Chief Executive Officer to integrate and quickly adapt to and understand our business, operations, and strategic plans. This will be critical to the Company and our management's ability to make informed decisions about our near-term strategic direction and operations. While our Board of Directors strives to mitigate the risk through a robust management succession process, which includes the outgoing Chief Executive Officer serving in an advisory role until December 2024, leadership transitions can be inherently difficult to manage. An inadequate transition may cause disruption to our business due to, among other things, diverting management's attention away from the Company's financial and operational goals or causing a deterioration in morale. **Current (2025):** Attracting, developing, and retaining talented employees is essential to the successful delivery of our products and has become more difficult and costly in the current labor market. Furthermore, as we continue to focus on innovation, our need for scientists and other professionals will increase and may result in increased labor costs. The ability to attract and retain talented 22 22 22 Table of Contents Table of Contents employees is critical in, among other things, meeting productivity goals as well as the development of new products and technologies, which is an integral component of our growth strategy. Competition for employees can be intense and if we are unable to successfully integrate, motivate and reward our employees, we may not be able to retain them. If we are unable to retain our employees or attract new employees in the future, our ability to effectively compete with our competitors and to grow our business could be adversely affected. Changing worker and talent market expectations around flexible work models and relocation has also impacted our ability to retain talent. In addition, the loss of any member of our senior management could materially adversely affect our ability to execute our business plan and strategy. We may not find an adequate replacement in a timely fashion, or at all and any replacement may view the business differently than current members of management. Future executives may make changes to our strategic focus, operations, business plans or financial guidance and outlook, with corresponding changes in how we report our results of operations. We can make no assurances that we would be able to properly manage any shift in focus or that any changes to our business would ultimately prove successful. --- ## Modified: If we are unable to successfully execute our strategic transformation, including our portfolio optimization, it may have a material adverse effect on our business, results of operations and financial condition. **Key changes:** - Reworded sentence: "As a part of our ongoing strategic transformation and our portfolio optimization strategy, we continue to evaluate and work towards divestitures or strategic transactions." - Removed sentence: "As a part of our ongoing strategic transformation and our portfolio optimization strategy as discussed above, we continue to evaluate and work towards divestitures or strategic transactions." - Removed sentence: "For instance, during the third quarter of 2022, the second quarter of 2023 and the third quarter of 2023, we completed divestitures of our Microbial Control business, a portion of the Savory Solutions business and our Flavor Specialty Ingredients business, respectively." - Removed sentence: "During the third quarter of 2023, we announced that we entered into an agreement for the sale of our Cosmetics Ingredients business, which is expected to close in the first quarter of 2024, subject to customary closing conditions." - Removed sentence: "The successful entry into and closing of such transactions is contingent on many factors, including, among other things, the performance of the underlying assets or business as well as the relevant industry dynamics overall, the interest of potential buyers and their ability to finance such transactions (which is also impacted by general economic and financial conditions and market dynamics), requisite regulatory approvals, and related separation activities." **Prior (2024):** In December 2022, we announced our new strategic and financial vision previewing a refreshed strategic plan and new operating model, which among other things, consists of a renewed growth-focus strategy, enhanced cost & productivity initiatives, a redesigned operating model, a reaffirmation of our commitment to our portfolio optimization initiatives and a plan to evolve our Board in line with best-in-class governance standards, as well as certain changes to our Executive Leadership Team. Implementing such changes can be complex, costly and time-consuming and may also result in unanticipated issues, such as additional expenses, competitive responses, employee turnover or impact on our commercial relationships. Even if such initiatives are implemented successfully, the full benefits may not be realized or may not be realized within the desired timeframe. The failure to meet the challenges involved in implementing our strategic transformation could result in a material adverse impact on our business, results of operations and financial condition. As a part of our ongoing strategic transformation and our portfolio optimization strategy as discussed above, we continue to evaluate and work towards divestitures or strategic transactions. For instance, during the third quarter of 2022, the second quarter of 2023 and the third quarter of 2023, we completed divestitures of our Microbial Control business, a portion of the Savory Solutions business and our Flavor Specialty Ingredients business, respectively. During the third quarter of 2023, we announced that we entered into an agreement for the sale of our Cosmetics Ingredients business, which is expected to close in the first quarter of 2024, subject to customary closing conditions. The successful entry into and closing of such transactions is contingent on many factors, including, among other things, the performance of the underlying assets or business as well as the relevant industry dynamics overall, the interest of potential buyers and their ability to finance such transactions (which is also impacted by general economic and financial conditions and market dynamics), requisite regulatory approvals, and related separation activities. Divestitures involve separation costs and efforts that may divert management's and employees' attention and also result in stranded costs and dis-synergies for the Company. Moreover, divestitures often entail post-closing third party agreements, such as supply arrangements (including with "take or pay" provisions), product manufacturing, cross-licensing, transitional, or site services agreements ("ancillary agreements"), that may bind the Company for certain periods after closing, during which market or Company conditions may change. Any failure to enter into, complete or potential delays in closing any such transaction, any failure to mitigate or manage the associated costs of such transactions, or obtain appropriate terms for ancillary agreements, could adversely affect the implementation of our portfolio optimization strategy as well as our financial condition, including our leverage ratio. **Current (2025):** As a part of our ongoing strategic transformation and our portfolio optimization strategy, we continue to evaluate and work towards divestitures or strategic transactions. For instance, during the second and third quarter of 2024, we completed divestitures of our Cosmetic Ingredients business and our Flavors and Essences UK business, respectively. Additionally, during March 2024 and October 2024, we entered into agreements for the sale of our Pharma Solutions business disposal group and our nitrocellulose business, respectively, which are each expected to close in the second quarter of 2025. Strategic transactions are generally dependent on many factors which we cannot fully control, including, among other things, relevant industry dynamics or macroeconomic conditions, the interest of potential buyers and their ability to finance such transactions (which is also impacted by general economic and financial conditions and market dynamics), the performance of the underlying assets or business, requisite regulatory approvals, and related separation activities. Implementing such transactions can be complex, costly and time-consuming and may also result in additional expenses and unanticipated issues, such as competitive responses, employee turnover or impact on our commercial relationships. For instance, divestitures involve separation costs and efforts that may divert management's and employees' attention and also result in stranded costs and dis-synergies for the Company. Moreover, divestitures often entail post-closing third-party agreements, such as supply arrangements (including with "take or pay" provisions), product manufacturing, cross-licensing, transitional, or site services agreements ("ancillary agreements"), that may bind the Company for certain periods after closing, during which market or Company conditions may change. Any failure to enter into, complete or potential delays in closing any such transaction, any failure to avoid potential post-closing disputes, any failure to mitigate or manage the associated costs of such transactions, or obtain appropriate terms for ancillary agreements, could result in significant costs, adversely affect the successful implementation of our portfolio optimization strategy as well as our financial condition, including our leverage ratio. Even if such initiatives are implemented successfully, the full benefits may not be realized or may not be realized within the desired timeframe. The failure to meet the challenges involved in implementing our strategic transformation could result in a material adverse impact on our business, results of operations and financial condition. --- ## Modified: Supply chain disruptions, geopolitical developments, climate-change events, natural disasters, public health crises, tariffs and trade wars, and other events may adversely affect our business, our procurement of raw materials, and our development, manufacturing, distribution or sale of our products, and thus may impact our productivity, business and financial results. **Key changes:** - Reworded sentence: "We, directly or indirectly through our suppliers, are subject to risks, inherent in agriculture, development, manufacturing, distribution or sale on a global scale, including natural disasters, global or local health crises, international conflicts, terrorist acts, geopolitical developments, trade wars, industrial accidents, environmental events, climate change events (including severe weather events), strikes and other labor disputes, disruptions in supply chain or information systems, political or economic crises (such as uncertainty related to protracted U.S." - Reworded sentence: "However, if we do not accurately estimate the 15 15 15 Table of Contents Table of Contents amount of raw materials that will be used for the geographic region in which we will need these materials or competitively price our products, our margins could be adversely affected." - Reworded sentence: "In response to the events in Ukraine, the Company has limited the production and supply of ingredients in and to Russia and Belarus to only those that meet the essential needs of people, including food, hygiene and medicine, and as a result, our operating performance in Russia remains lower compared to previous years and may not reverse in the near future." **Prior (2024):** In connection with our manufacturing of our products, we often rely on third party suppliers for raw materials. We use many different raw materials for our business, such as essential oils, extracts and concentrates derived from fruits, vegetables, flowers, woods and other botanicals, animal products, raw fruits, organic chemicals and petroleum-based chemicals, as well as, gelatin, glycols, cellulose processed grains, guar, locust bean gum, organic vegetable oils, peels, saccharides, seaweed, soybeans, and sugars and yeasts. Supply chain disruptions, such as the ones related to the COVID-19 pandemic, may impair or delay our ability to obtain sufficient quantities of certain raw materials through our ordinary supply channels and cause us to incur higher costs by procuring raw materials from other sources in order to compensate for such delays or lack of availability. In addition, our suppliers, similar to us, are subject to risks, inherent in agriculture, manufacturing and distribution on a global scale, including industrial accidents, environmental events, climate change, strikes and other labor disputes, disruptions in supply chain or information systems, disruption or loss of key research or manufacturing sites, product quality control, safety and environmental compliance issues, licensing requirements and other regulatory issues, as well as natural disasters, global or 16 16 16 Table of Contents Table of Contents local health crises, international conflicts, terrorist acts, geopolitical developments, trade wars, and other external factors over which neither they nor we have control. These suppliers could also become insolvent or experience other financial distress. If our suppliers are unable to supply us with sufficient quantities of ingredients and raw materials to meet our needs, we would need to seek alternative sources of such materials (which may result in higher transportation or procurement costs) or pursue our own production of such ingredients or direct acquisition of such raw materials. However, for certain of our ingredients and raw materials, we rely on a limited number of suppliers where there are not readily available alternatives. If we are unable to obtain or manufacture alternative sources of such ingredients or raw materials at a similar cost, we may seek to (i) reformulate our products and/or (ii) increase pricing to reflect the higher supply cost. To mitigate our sourcing risk, we maintain strategic stock levels for critical items. However, if we do not accurately estimate the amount of raw materials that will be used for the geographic region in which we will need these materials or competitively price our products, our margins could be adversely affected. Geopolitical developments, such as trade wars, the Russia-Ukraine war, the Israel-Hamas war and wider Middle East developments (including disruptions to the Red Sea passage or such conflicts spreading further in the relevant regions), could adversely impact, among other things, our raw material, energy and transportation costs, certain of our suppliers, distributors, customers and local markets, global and local macroeconomic conditions, and cause further supply chain disruptions (including by delaying the delivery times of raw materials needed for our business or our products to customers). As the Russia-Ukraine war has prolonged, it continues to impact our sourcing of certain raw materials for future years, and we continue to look for alternative suppliers or adjust the types of raw materials used in our products. In addition, as the Israel-Hamas war develops with potential implications for the wider Middle East (including the Red Sea passage), it may have similar impacts on suppliers, customers or local markets. At the same time, climate-change related disruptions, may affect the availability, quality and pricing of raw materials. There is growing evidence that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather and precipitation patterns, growing and harvesting conditions (both on land and in the sea), and the frequency and severity of extreme weather and natural disasters, such as floods, wildfires, droughts and water scarcity. To the extent such climate change effects have a negative impact on crop size and quality, supply chain, energy or transportation costs, it could impact the availability, quality and pricing of affected raw materials. Climate related policies and energy production restrictions and pricing may exacerbate such negative impacts. More generally, as we source many of our raw materials globally to help ensure quality control or to mitigate supply chain disruptions, we are subject to additional risks related to the increases in energy or transportation costs. Energy prices are in turn subject to significant volatility caused by, among other things, market fluctuations, supply and demand changes, currency fluctuations, production and transportation disruptions, and other world events, as well as geopolitical developments and climate change related conditions discussed above. If we are not able to successfully mitigate such supply chain and climate-change related risks, we could experience disruptions in production or increased costs, which may result in decrease in our gross margin or reduced sales, and have a material adverse effect on our business, results of operations and financial condition. **Current (2025):** We, directly or indirectly through our suppliers, are subject to risks, inherent in agriculture, development, manufacturing, distribution or sale on a global scale, including natural disasters, global or local health crises, international conflicts, terrorist acts, geopolitical developments, trade wars, industrial accidents, environmental events, climate change events (including severe weather events), strikes and other labor disputes, disruptions in supply chain or information systems, political or economic crises (such as uncertainty related to protracted U.S. federal government funding negotiations or inflation), disruption or loss of key research or manufacturing sites, product quality control, safety and environmental compliance issues, regulatory requirements, as well as other external factors over which neither our suppliers nor we have control. We use many different raw materials for our business, such as essential oils, extracts and concentrates derived from fruits, vegetables, flowers, woods and other botanicals, animal products, raw fruits, organic chemicals and petroleum-based chemicals, as well as, gelatin, glycols, cellulose products and cellulose processed grains, guar, locust bean gum, organic vegetable oils, peels, saccharides, seaweed, soybeans, and sugars and yeasts. In connection with our manufacturing of our products, we often rely on third-party suppliers for such raw materials. If our suppliers are unable to supply us with sufficient quantities of ingredients and raw materials to meet our needs, we would need to seek alternative sources of such materials (which may result in higher procurement costs) or pursue our own production of such ingredients or direct acquisition of such raw materials. However, for certain of our ingredients and raw materials, we rely on a limited number of suppliers where there are not readily available alternatives. If we are unable to obtain or manufacture alternative sources of such ingredients or raw materials at a similar cost, we may seek to (i) reformulate our products and/or (ii) increase pricing to reflect the higher supply cost. To mitigate our sourcing risk, we maintain strategic stock levels for critical items. However, if we do not accurately estimate the 15 15 15 Table of Contents Table of Contents amount of raw materials that will be used for the geographic region in which we will need these materials or competitively price our products, our margins could be adversely affected. Environmental events may affect our facilities, customers or suppliers and the availability, quality and pricing of raw materials. There is growing evidence that carbon dioxide and other greenhouse gases in the atmosphere may have an adverse impact on global temperatures, weather and precipitation patterns, growing and harvesting conditions (both on land and in the sea), and the frequency and severity of extreme weather and natural disasters, such as floods, wildfires, droughts and water scarcity. Environmental or climate change events may disrupt our facilities and have a negative impact on, among other things, crop size and quality, supply chain, energy or transportation costs, affecting as a result our manufacturing processes and the availability, quality, and pricing of affected raw materials. Climate related policies and energy production restrictions and pricing, or the lack or failure of such policies and restrictions, may exacerbate such negative impacts. As we source many of our raw materials globally, we are subject to additional risks. Supply chain disruptions, as demonstrated by the disruptions related to the COVID-19 pandemic, may result in increased costs, delays or limited availability related to raw materials, strain on shipping and transportation resources, and higher energy prices, which can negatively impact our margins and operating results. Energy prices (including the price of fuel and alternative energy sources) are in and of themselves subject to significant volatility caused by, among other things, market fluctuations, supply and demand changes, currency fluctuations, production and transportation disruptions, and other world events, as well as geopolitical developments and climate change related conditions discussed above. In addition, the imposition of or changes in customs, tariffs, other trade protection measures (including with respect to China, Canada, Mexico, European Union or other jurisdictions by the U.S.), import or export licensing requirements, and sanctions on trade with certain countries, imposed by the U.S. or other countries as well as related retaliatory actions or ensuing uncertainty related to such trade measures, could adversely affect demand for our products, our cost or ability to import raw materials or export our products to other markets. Similarly, geopolitical developments, such as the US-China relations, escalating tensions between China and Taiwan, the Russia-Ukraine war, the Israel-Hamas war and wider Middle East developments (including disruptions to the Red Sea passage or such conflicts spreading further in the relevant regions), could also impact, among other things, certain raw material, energy and transportation costs, certain of our suppliers, distributors, customers and local markets, global and local macroeconomic conditions, and cause further supply chain disruptions (including by delaying the delivery times of raw materials needed for our business or our products to customers). We maintain operations in both Russia and Ukraine and export products to customers in Russia and Ukraine from operations outside the region. As the Russia-Ukraine war has prolonged, it continues to impact our sourcing of certain raw materials for future years, and we continue to look for alternative suppliers or adjust the types of raw materials used in our products. In response to the events in Ukraine, the Company has limited the production and supply of ingredients in and to Russia and Belarus to only those that meet the essential needs of people, including food, hygiene and medicine, and as a result, our operating performance in Russia remains lower compared to previous years and may not reverse in the near future. The Israel-Hamas war and wider Middle East developments have impacted and may continue to impact our operations in Israel and certain of our customers, local markets and suppliers. While we operate research and development, manufacturing and distribution facilities throughout the world, many of these facilities are extremely specialized and certain of our research and development or creative laboratories facilities are uniquely situated to support our research and development efforts while certain of our manufacturing facilities are the sole location where a specific ingredient or product is produced. If our research and development, manufacturing and distribution facilities were disrupted, including due to the risks outlined above, the cost of relocating or replacing these activities or reformulating these ingredients or products may be substantial, which could result in production or development delays or otherwise have an adverse effect on our margins, operating results and future growth. If we are not able to successfully mitigate such risks, we could experience disruptions in production or increased costs, which may result in decrease in our gross margin or reduced sales, and have a material adverse effect on our productivity, business, results of operations and financial condition. --- ## Modified: We are subject to increasing customer, consumer, shareholder and regulatory focus on sustainability, which may result in additional costs in order to meet new requirements, including adversely affecting our stock price, results of operations and access to capital. **Key changes:** - Reworded sentence: "Our customers, consumers and shareholders are becoming increasingly sensitive to environmental-related and other long-term sustainability issues." - Removed sentence: "23 23 23 Table of Contents Table of Contents" **Prior (2024):** Federal, state, local and foreign governments, our customers, consumers and shareholders are becoming increasingly sensitive to environmental and other sustainability issues. In response, we have committed to a sustainability strategy to better understand the opportunities and risks in our sustainable efforts. The increased focus on sustainability may result in new regulations and customer requirements that could affect us. These could cause us to incur additional direct costs or to make changes to our operations in order to comply with any new regulations and customer requirements. We could also lose revenue if our customers divert business from us because we have not complied with their sustainability requirements. Increased shareholder activism with respect to sustainability or other governance issues or management concerns could also lead to increased costs and disruption to operations. These potential costs, changes and loss of revenue could have a material adverse effect on our business, results of operations and financial condition. 23 23 23 Table of Contents Table of Contents **Current (2025):** Our customers, consumers and shareholders are becoming increasingly sensitive to environmental-related and other long-term sustainability issues. At the same time, we face increasing regulatory reporting requirements related to sustainability topics. The increased focus on sustainability has resulted and may continue to result in new and changing regulations, including the need to comply with different regulatory regimes in different jurisdictions, and customer requirements that could affect us. These could cause us to incur additional capital expenditure and other costs or to make changes to our operations or reporting systems in order to comply with any new regulations and customer requirements. We could also lose revenue, including as a result of negative publicity, if our customers divert business from us because we have not complied with their sustainability requirements. Increased regulatory scrutiny, consumer or customer legal actions, shareholder activism with respect to sustainability, shifting public and investor sentiment on environmental, social and governance matters could also lead to increased costs and disruption to operations. These potential costs, changes and loss of revenue could have a material adverse effect on our business, results of operations and financial condition. --- ## Modified: Regulatory, consumer and economic trends may result in significant costs or adversely affect demand for our products which may have a negative impact on our operating results and future growth. **Key changes:** - Added sentence: "Increased regulatory scrutiny or uncertainty towards artificial or other ingredients and certain chemical substances in the U.S." - Added sentence: "or other jurisdictions, may result in significant costs due to, among other things, delays in developing, manufacturing or marketing of new or existing products, potential required changes in business practices, higher compliance costs, or capital expenditures." - Added sentence: "See, also " - If we are unable to comply with regulatory requirements and industry standards, including those regarding product safety, quality, efficacy and environmental impact, we could incur significant costs and suffer reputational harm which could adversely affect results of operations." At the same time, changes in consumer trends driven by increasing awareness of health and wellness, as well as the development of new weight management pharmaceutical products such as glucagon-like peptide-1 (GLP-1) receptor agonists, may affect consumer behavior." - Added sentence: "In addition, there has been growing pressure by consumers, non-governmental organizations and, in some cases, governmental agencies for more transparency in product labeling (including related to biotechnology applications, such as gene editing and mapping)." - Added sentence: "Our customers have been taking steps to address these trends, including by voluntarily providing product-specific ingredients disclosure, which may impact consumer behavior." **Prior (2024):** Many of our products are ingredients in a wide assortment of global consumer products throughout the world. Historically, demand for consumer products using our products, was stimulated and broadened by changing social habits and consumer needs, population growth, an expanding global middle-class and general economic growth, especially in emerging markets. Changes in the global, regional or local economic conditions have, and may in the near future, adversely impact demand for consumer products at a regional or global level. Such parameters include, but are not limited to, increased inflation, unemployment and underemployment, salaries and wage rates stagnation, low growth rates, and ongoing impacts of the COVID-19 pandemic. Reduced consumer spending may cause changes in our customer orders including reduced demand for our products or order cancellations. The timing of placing of orders and the amounts of these orders are generally at our customers' discretion. Customers may cancel, reduce or postpone orders with us on relatively short notice. Significant cancellations, reductions or delays in orders by customers could affect our results of operation. **Current (2025):** Increased regulatory scrutiny or uncertainty towards artificial or other ingredients and certain chemical substances in the U.S. or other jurisdictions, may result in significant costs due to, among other things, delays in developing, manufacturing or marketing of new or existing products, potential required changes in business practices, higher compliance costs, or capital expenditures. See, also " - If we are unable to comply with regulatory requirements and industry standards, including those regarding product safety, quality, efficacy and environmental impact, we could incur significant costs and suffer reputational harm which could adversely affect results of operations." At the same time, changes in consumer trends driven by increasing awareness of health and wellness, as well as the development of new weight management pharmaceutical products such as glucagon-like peptide-1 (GLP-1) receptor agonists, may affect consumer behavior. In addition, there has been growing pressure by consumers, non-governmental organizations and, in some cases, governmental agencies for more transparency in product labeling (including related to biotechnology applications, such as gene editing and mapping). Our customers have been taking steps to address these trends, including by voluntarily providing product-specific ingredients disclosure, which may impact consumer behavior. These and other consumer and regulatory trends could affect the types and volumes of our ingredients and compounds that our customers include in their consumer product offerings and, therefore, the demand for our products, which, among other things, can impact our ability to meet certain productivity levels. Many of our products are ingredients in a wide assortment of global consumer products throughout the world. Changes in the global, regional or local economic conditions have, and may in the near future, adversely impact demand for consumer products at a regional or global level. Such parameters include, but are not limited to, increased inflation, unemployment and underemployment, salaries and wage rates stagnation, low growth rates, and impacts of supply disruptions, climate events, or geopolitical developments. See, also " - International economic, political, legal, compliance and business factors could negatively affect our financial statements, operations and growth." Changes in demand by our customers, including by regulatory, consumer or economic trends, may translate in changed orders by our customers, including reduced quantities or order cancellations. The timing or volumes in our customers' orders 14 14 14 Table of Contents Table of Contents are generally at our customers' discretion. Customers may cancel, reduce or postpone orders with us on relatively short notice. If we are unable to anticipate or react to these trends in a timely and cost-effective manner, our productivity, results of operations and future growth may be adversely affected. --- *Data sourced from SEC EDGAR. Last updated 2026-06-01.*