Net pension balance differential amount settled in cash

  
(2)At the time of the Transactions, each outstanding stock option, cash-settled stock appreciation right (“SAR”), restricted stock unit (“RSU”) award, and restricted stock award (“RSA”) with respect to DuPont common stock held by employees of N&B were canceled and converted into similar classes of equity awards of IFF’s Class A Common Stock. Further, each outstanding Performance Share Unit (“PSU”) award with respect to DuPont common stock held by employees of N&B were canceled and converted into IFF’s RSU awards. The conversion was based on the ratio of the volume-weighted average per share closing price of DuPont stock on the twenty trading days prior to the Closing Date and IFF’s stock on the twenty trading days following the Closing Date. The fair value of replacement equity-based awards attributable to pre-Merger service was recorded as part of the consideration transferred in the Merger (see Note 13 for additional information).(3)The Merger related agreements provided that if the net pension balance of N&B as of the Closing Date differs from $220 million, such differential amount will be settled in cash. The Company has estimated the amount that it will receive and, accordingly, made an adjustment of $12 million to the total purchase consideration.Purchase Price AllocationThe Merger with N&B was accounted for under the acquisition method under which the Company allocated the purchase consideration to the tangible net assets and identifiable assets acquired based on estimated fair values at the Closing Date, and recorded the excess of consideration over the fair values of net assets acquired as goodwill. The purchase price allocation was finalized as of the end of 2021 when the Company finalized the valuation of the acquired property, plant and equipment, goodwill, intangible assets (trade names, customer relationships, IPR&D, and technological know-how), inventory and leases, in addition to ensuring all other assets and liabilities and contingencies have been identified and recorded. Further, the assessment of certain contingencies including loss contracts and environmental liabilities, pension and postretirement benefit obligations and taxes has been completed. Additionally, in connection with finalizing the purchase price allocation, the Company finalized the projected combined future tax rate to be applied to the valuation of assets and recorded the applicable adjustments to the values of goodwill and intangible assets.The following table summarizes the fair values of the assets acquired and liabilities assumed as of February 1, 2021, presenting both the preliminary and final purchase price allocations:

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| (DOLLARS IN MILLIONS) | Preliminary Estimated Fair Value as Reported in the First Quarter of 2021 |  | Measurement Period Adjustments(1)(2) |  | As Reported in the Fourth Quarter of 2021 |
| Cash and cash equivalents | $ | 207  |  |  | $ | (14) |  |  | $ | 193  |  |
| Receivables | 962  |  |  | (9) |  |  | 953  |  |
| Inventory | 1,615  |  |  | (25) |  |  | 1,590  |  |
| Prepaid expenses and other current assets | 342  |  |  | 32  |  |  | 374  |  |
| Property, plant and equipment | 3,242  |  |  | (176) |  |  | 3,066  |  |
| Deferred income taxes | 75  |  |  | 8  |  |  | 83  |  |
| Intangible assets | 9,176  |  |  | 47  |  |  | 9,223  |  |
| Other assets | 702  |  |  | 116  |  |  | 818  |  |
| Accounts payable and accrued liabilities | (1,028) |  |  | (51) |  |  | (1,079) |  |
| Accrued payroll and employee benefits | (163) |  |  | 15  |  |  | (148) |  |
| Deferred tax liabilities(3) | (2,369) |  |  | (26) |  |  | (2,395) |  |
| Long-term debt | (7,636) |  |  | —  |  |  | (7,636) |  |
| Other long-term liabilities | (907) |  |  | 12  |  |  | (895) |  |
| Total identifiable net assets assumed | 4,218  |  |  | (71) |  |  | 4,147  |  |
| Non-controlling interest | (26) |  |  | 4  |  |  | (22) |  |
| Goodwill(4) | 11,762  |  |  | 55  |  |  | 11,817  |  |
| Purchase price | $ | 15,954  |  |  | $ | (12) |  |  | $ | 15,942  |  |

\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_(1)The preliminary fair value purchase price allocation of the assets and liabilities acquired in the N&B Merger as reported in the first quarter of 2021 were updated during the nine months ended December 31, 2021 to reflect updated fair values for intangible assets, property, plant and equipment, equity method investments and inventory. In addition, the carrying amounts of certain assets and liabilities were updated based on additional analysis of acquired assets and liabilities that existed at the Closing Date. (2)During the fourth quarter of 2021, the Company recorded an adjustment to reflect the receipt of approximately $53 million in cash from DuPont as a result of finalization of adjustments to the Special Cash Payment paid to DuPont by N&B, prior to the close of the Transactions.(3)The change to deferred tax liabilities was primarily a result of the finalization of the jurisdictional allocation of the tangible and intangible assets. All measurement period adjustments were offset against goodwill. 66
