Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 17, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | Ingredion Inc | ||
Entity Central Index Key | 1,046,257 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 9,305,000,000 | ||
Entity Common Stock, Shares Outstanding | 71,790,000 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements of Income | |||
Net sales before shipping and handling costs | $ 6,022 | $ 5,958 | $ 5,998 |
Less: shipping and handling costs | 318 | 337 | 330 |
Net sales | 5,704 | 5,621 | 5,668 |
Cost of sales | 4,302 | 4,379 | 4,553 |
Gross profit | 1,402 | 1,242 | 1,115 |
Selling, general and administrative expenses | 579 | 555 | 525 |
Other (income) - net | (4) | (1) | (24) |
Restructuring / impairment charges | 19 | 28 | 33 |
Operating expenses | 594 | 582 | 534 |
Operating income | 808 | 660 | 581 |
Financing costs-net | 66 | 61 | 61 |
Income before income taxes | 742 | 599 | 520 |
Provision for income taxes | 246 | 187 | 157 |
Net income | 496 | 412 | 363 |
Less: Net income attributable to non-controlling interests | 11 | 10 | 8 |
Net income attributable to Ingredion | $ 485 | $ 402 | $ 355 |
Weighted average common shares outstanding: | |||
Basic (in shares) | 72.3 | 71.6 | 73.6 |
Diluted (in shares) | 74.1 | 73 | 74.9 |
Earnings per common share of Ingredion: | |||
Basic (in dollars per share) | $ 6.70 | $ 5.62 | $ 4.82 |
Diluted (in dollars per share) | $ 6.55 | $ 5.51 | $ 4.74 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements of Comprehensive Income | |||
Net income | $ 496 | $ 412 | $ 363 |
Other comprehensive income (loss): | |||
Losses on cash-flow hedges, net of income tax effect of $6, $19 and $12, respectively | (11) | (42) | (29) |
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $16, $14 and $23, respectively | 33 | 32 | 50 |
Actuarial gain (loss) on pension and other postretirement obligations, settlements and plan amendments, net of income tax effect of $4, $5 and $5, respectively | (10) | 13 | (12) |
Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect of $-, $- and $1, respectively | 1 | 1 | 4 |
Unrealized gain on investments, net of income tax effect | 1 | ||
Currency translation adjustment | 7 | (324) | (212) |
Comprehensive income | 517 | 92 | 164 |
Less: Comprehensive income attributable to non-controlling interests | 12 | 10 | 8 |
Comprehensive income attributable to Ingredion | $ 505 | $ 82 | $ 156 |
Consolidated Statements of Com4
Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements of Comprehensive Income | |||
Losses on cash-flow hedges, net of income tax effect | $ 6 | $ 19 | $ 12 |
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of | (16) | (14) | (23) |
Actuarial gains on pension and postretirement obligations, settlements and plan amendments, income tax effect | $ 4 | $ (5) | 5 |
Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect | $ (1) |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 512 | $ 434 |
Short-term investments | 4 | 6 |
Accounts receivable - net | 923 | 775 |
Inventories | 789 | 715 |
Prepaid expenses | 24 | 20 |
Total current assets | 2,252 | 1,950 |
Property, plant and equipment, at cost | ||
Land | 183 | 171 |
Buildings | 704 | 643 |
Machinery and equipment | 4,055 | 3,817 |
Property, Plant and Equipment - Gross | 4,942 | 4,631 |
Less: accumulated depreciation | 2,826 | 2,642 |
Property, plant and equipment - net | 2,116 | 1,989 |
Goodwill | 784 | 601 |
Other intangible assets - net of accumulated amortization of $106 and $82, respectively | 502 | 410 |
Deferred income tax assets | 7 | 7 |
Other assets | 121 | 117 |
Total Assets | 5,782 | 5,074 |
Current liabilities | ||
Short-term borrowings | 106 | 19 |
Accounts payable | 440 | 423 |
Accrued liabilities | 432 | 300 |
Total current liabilities | 978 | 742 |
Non-current liabilities | 158 | 170 |
Long-term debt | 1,850 | 1,819 |
Deferred income tax liabilities | 171 | 139 |
Share-based payments subject to redemption | 30 | 24 |
Ingredion Stockholders' equity | ||
Preferred stock - authorized 25,000,000 shares- $0.01 par value - none issued | ||
Common stock — authorized 200,000,000 shares-$0.01 par value, 77,810,875 issued at December 31, 2016 and December 31, 2015, respectively | 1 | 1 |
Additional paid-in capital | 1,149 | 1,160 |
Less - Treasury stock (common stock: 5,396,526 and 6,194,510 shares at December 31, 2016 and December 31, 2015, respectively) at cost | (413) | (467) |
Accumulated other comprehensive loss | (1,071) | (1,102) |
Retained earnings | 2,899 | 2,552 |
Total Ingredion stockholders' equity | 2,565 | 2,144 |
Non-controlling interests | 30 | 36 |
Total equity | 2,595 | 2,180 |
Total liabilities and equity | $ 5,782 | $ 5,074 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Accumulated depreciation (in dollars) | $ 2,826 | $ 2,642 | ||
Other intangible assets - accumulated amortization (in dollars) | $ 106 | $ 82 | ||
Preferred stock, authorized shares | 25,000,000 | 25,000,000 | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||
Preferred stock, issued shares | 0 | 0 | ||
Common stock, authorized shares | 200,000,000 | 200,000,000 | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||
Common stock, shares issued | 77,810,875 | 77,810,875 | ||
Treasury stock, shares | 5,396,526 | 6,194,510 | ||
Common Stock Issued | ||||
Common stock, shares issued | 77,811,000 | 77,811,000 | 77,811,000 | 77,673,000 |
Treasury Stock | ||||
Common stock, shares issued | 5,397,000 | 6,195,000 | 6,489,000 | 3,361,000 |
Common Stock Shares Outstanding | ||||
Common stock, shares issued | 72,414,000 | 71,616,000 | 71,322,000 | 74,312,000 |
Consolidated Statements of Equi
Consolidated Statements of Equity and Redeemable Equity - USD ($) $ in Millions | Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Non-controlling Interests | Share-based Payments Subject to Redemption | Total |
Balance at Dec. 31, 2013 | $ 1 | $ 1,166 | $ (225) | $ (583) | $ 2,045 | $ 25 | ||
Balance Share-based Payments Subject to Redemption at Dec. 31, 2013 | $ 24 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income attributable to Ingredion | 355 | $ 355 | ||||||
Net income attributable to non-controlling interests | 8 | (8) | ||||||
Dividends declared | (125) | (3) | ||||||
Repurchases of common stock | (3) | (301) | ||||||
Issuance of common stock on exercise of stock options | (17) | 37 | ||||||
Stock option expense | 7 | |||||||
Other share-based compensation | 5 | 8 | (2) | |||||
Excess tax benefit on share-based compensation | 6 | |||||||
Other Comprehensive loss | (199) | |||||||
Balance at Dec. 31, 2014 | 1 | 1,164 | (481) | (782) | 2,275 | 30 | ||
Balance Share-based Payments Subject to Redemption at Dec. 31, 2014 | 22 | |||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income attributable to Ingredion | 402 | 402 | ||||||
Net income attributable to non-controlling interests | 10 | (10) | ||||||
Dividends declared | (125) | (4) | ||||||
Repurchases of common stock | (7) | (34) | ||||||
Issuance of common stock on exercise of stock options | (14) | 35 | ||||||
Stock option expense | 7 | |||||||
Other share-based compensation | 2 | 13 | 2 | |||||
Excess tax benefit on share-based compensation | 8 | |||||||
Other Comprehensive loss | (320) | |||||||
Balance at Dec. 31, 2015 | 1 | 1,160 | (467) | (1,102) | 2,552 | 36 | 2,180 | |
Balance Share-based Payments Subject to Redemption at Dec. 31, 2015 | 24 | 24 | ||||||
Increase (Decrease) in Stockholders' Equity | ||||||||
Net income attributable to Ingredion | 485 | 485 | ||||||
Net income attributable to non-controlling interests | 11 | (11) | ||||||
Dividends declared | (138) | (7) | ||||||
Repurchases of common stock | (8) | |||||||
Issuance of common stock on exercise of stock options | (14) | 43 | ||||||
Stock option expense | 9 | |||||||
Other share-based compensation | 2 | 11 | 6 | |||||
Other Comprehensive loss | 31 | (10) | ||||||
Balance at Dec. 31, 2016 | $ 1 | $ 1,149 | $ (413) | $ (1,071) | $ 2,899 | $ 30 | 2,595 | |
Balance Share-based Payments Subject to Redemption at Dec. 31, 2016 | $ 30 | $ 30 |
Consolidated Statements of Equ8
Consolidated Statements of Equity and Redeemable Equity (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements of Equity and Redeemable Equity | |||
Losses on cash-flow hedges, income tax effect | $ (6) | $ (19) | $ (12) |
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of | (16) | (14) | (23) |
Actuarial gains on pension and postretirement obligations, settlements and plan amendments, income tax effect | $ (4) | $ 5 | (5) |
Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect | $ (1) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash provided by operating activities: | |||
Net income | $ 496 | $ 412 | $ 363 |
Non-cash charges to net income: | |||
Depreciation and amortization | 196 | 194 | 195 |
Deferred income taxes | (5) | (6) | (11) |
Write-off of impaired assets | 10 | 33 | |
Gain on sale of plant | (10) | ||
Charge for fair value mark-up of acquired inventory | 10 | ||
Other | 101 | 96 | 68 |
Changes in working capital: | |||
Accounts receivable and prepaid expenses | (131) | (29) | (15) |
Inventories | (19) | 9 | (6) |
Accounts payable and accrued liabilities | 127 | 30 | 66 |
Margin accounts | 15 | (34) | 39 |
Other | (9) | 4 | (1) |
Cash provided by operating activities | 771 | 686 | 731 |
Cash used for investing activities: | |||
Payments for acquisitions, net of cash acquired of $4, $16 and $-, respectively | (407) | (434) | |
Capital expenditures | (284) | (280) | (276) |
Investment in non-consolidated affiliate | (2) | ||
Short-term investments | 1 | 27 | (34) |
Proceeds from disposal of plants and properties | 3 | 38 | 5 |
Proceeds from sale of investment | 11 | ||
Cash used for investing activities | (689) | (649) | (294) |
Cash provided by (used for) financing activities: | |||
Proceeds from borrowings | 1,000 | 1,388 | 231 |
Payments on debt | (874) | (1,366) | (213) |
Debt issuance costs | (6) | ||
Repurchase of common stock | (8) | (41) | (304) |
Issuance of common stock | 29 | 21 | 20 |
Dividends paid (including to non-controlling interests) | (141) | (126) | (128) |
Excess tax benefit on share-based compensation | 8 | 6 | |
Cash used for financing activities | (116) | (388) | |
Effect of foreign exchange rate changes on cash | (4) | (67) | (43) |
Increase (decrease) in cash and cash equivalents | 78 | (146) | 6 |
Cash and cash equivalents, beginning of period | 434 | 580 | 574 |
Cash and cash equivalents, end of period | $ 512 | $ 434 | $ 580 |
Consolidated Statements of Ca10
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Consolidated Statements of Cash Flows | ||
Cash acquired from acquisition | $ 4 | $ 16 |
Description of the Business
Description of the Business | 12 Months Ended |
Dec. 31, 2016 | |
Description of the Business | |
Description of the Business | NOTE 1 – Description of the Business Ingredion Incorporated (“the Company”) was founded in 1906 and became an independent and public company as of December 31, 1997. The Company primarily manufactures and sells sweetener, starches, nutrition ingredients and biomaterial solutions derived from the wet milling and processing of corn and other starch-based materials to a wide range of industries, both domestically and internationally. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | NOTE 2 – Summary of Significant Accounting Policies Basis of presentation -- The consolidated financial statements consist of the accounts of the Company, including all significant subsidiaries. Intercompany accounts and transactions are eliminated in consolidation. The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the value of purchase consideration, valuation of accounts receivable, inventories, goodwill, intangible assets and other long-lived assets, legal contingencies, guarantee obligations, and assumptions used in the calculation of income taxes, and pension and other postretirement benefits, among others. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management will adjust such estimates and assumptions when facts and circumstances dictate. Foreign currency devaluations, corn price volatility, access to difficult credit markets and adverse changes in the global economic environment have combined to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the financial statements in future periods. Assets and liabilities of foreign subsidiaries, other than those whose functional currency is the US dollar, are translated at current exchange rates with the related translation adjustments reported in equity as a component of accumulated other comprehensive income (loss). The US dollar is the functional currency for the Company’s Mexico subsidiary. Income statement accounts are translated at the average exchange rate during the period. However, significant nonrecurring items related to a specific event are recognized at the exchange rate on the date of the significant event. For foreign subsidiaries where the US dollar is the functional currency, monetary assets and liabilities are translated at current exchange rates with the related adjustment included in net income. Non-monetary assets and liabilities are translated at historical exchange rates. Although the Company hedges the predominance of its transactional foreign exchange risk (see Note 6), the Company incurs foreign currency transaction gains/losses relating to assets and liabilities that are denominated in a currency other than the functional currency. For 2016, 2015 and 2014, the Company incurred foreign currency transaction losses of $3 million, $6 million and $1 million, respectively. The Company’s accumulated other comprehensive loss included in equity on the Consolidated Balance Sheets includes cumulative translation losses of approximately $1 billion at both December 31, 2016 and 2015. Cash and cash equivalents -- Cash equivalents consist of all instruments purchased with an original maturity of three months or less, and which have virtually no risk of loss in value. Inventories -- Inventories are stated at the lower of cost or net realizable value. Costs are predominantly determined using the weighted average method. Investments -- Investments in the common stock of affiliated companies over which the Company does not exercise significant influence are accounted for under the cost method. In 2016, the Company invested $2 million in SweeGen Inc. which it accounts for under the cost method. In 2014, the Company sold an investment that it had accounted for under the cost method. The Company received $11 million in cash and recorded a pre-tax gain of $5 million from the sale. Investments that enable the Company to exercise significant influence, but do not represent a controlling interest, are accounted for under the equity method; such investments are carried at cost, adjusted to reflect the Company’s proportionate share of income or loss, less dividends received. The Company did not have any investments accounted for under the equity method at December 31, 2016 or 2015. The Company has equity interests in the CME Group Inc. and CBOE Holdings, Inc., which are classified as available for sale securities. The investments are carried at fair value with unrealized gains and losses recorded to other comprehensive income. The Company would recognize a loss on its investments when there is a loss in value of an investment that is other than temporary. Investments are included in Other assets in the Consolidated Balance Sheets and are not significant. Leases -- The Company leases rail cars, certain machinery and equipment, and office space. The Company classifies its leases as either capital or operating based on the terms of the related lease agreement and the criteria contained in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 840, Leases, and related interpretations. Property, plant and equipment and depreciation -- Property, plant and equipment (“PP&E”) are stated at cost less accumulated depreciation. Depreciation is generally computed on the straight-line method over the estimated useful lives of depreciable assets, which range from 25 to 50 years for buildings and from 2 to 25 years for all other assets. Where permitted by law, accelerated depreciation methods are used for tax purposes. The Company reviews the recoverability of the net book value of PP&E for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable from estimated future cash flows expected to result from its use and eventual disposition. If this review indicates that the carrying values will not be recovered, the carrying values would be reduced to fair value and an impairment loss would be recognized. As required under accounting principles generally accepted in the United States, the impairment analysis for long-lived assets occurs before the goodwill impairment assessment described below. Goodwill and other intangible assets -- Goodwill ($784 million and $601 million at December 31, 2016 and 2015, respectively) represents the excess of the cost of an acquired entity over the fair value assigned to identifiable assets acquired and liabilities assumed. The Company also has other intangible assets of $502 million and $410 million at December 31, 2016 and 2015, respectively. The carrying amount of goodwill by reportable business segment at December 31, 2016 and 2015 was as follows: North South Asia (in millions) America America Pacific EMEA Total Balance at December 31, 2013 $ $ $ $ $ Impairment charges — — — Currency translation — Balance at December 31, 2014 $ $ $ $ $ Acquisitions — — — Disposal — — — Currency translation — Balance at December 31, 2015 $ $ $ $ $ Acquisitions — — — Currency translation — Balance at December 31, 2016 $ $ $ $ $ Goodwill before impairment charges $ $ $ $ $ Accumulated impairment charges — Balance at December 31, 2015 $ $ $ $ $ Goodwill before impairment charges $ $ $ $ $ Accumulated impairment charges — Balance at December 31, 2016 $ $ $ $ $ The following table summarizes the Company’s other intangible assets for the periods presented: As of December 31, 2016 As of December 31, 2015 Weighted Weighted Average Average Useful Useful Accumulated Life Accumulated Life (in millions) Gross Amortization Net (years) Gross Amortization Net (years) Trademarks/tradenames $ $ — $ — $ $ — $ — Customer relationships Technology TIC Gums intangible assets (preliminary) — Various — — — — Other Total other intangible assets $ $ $ $ $ $ On December 29, 2016, the Company completed its acquisition of TIC Gums Incorporated (“TIC Gums”). A preliminary allocation of the purchase price to the assets acquired and liabilities assumed was made based on available information and incorporating management’s best estimates. The table above includes the preliminary allocation of both definite –lived and indefinite intangible assets. See Note 3 of the notes to the consolidated financial statements for additional information. For definite-lived intangible assets, the Company recognizes the cost of such amortizable assets in operations over their estimated useful lives and evaluates the recoverability of the assets whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Amortization expense related to intangible assets was $25 million in 2016, $22 million in 2015, and $14 million in 2014. Based on acquisitions completed through December 31, 2016 including the preliminary purchase price allocations for TIC Gums and Shandong Huanong Specialty Corn Development Co., Ltd., intangible asset amortization expense for the next five years is shown below. The amortization is subject to change based on finalization of the purchase accounting for both acquisitions. (in millions) Year Amortization Expense 2017 $ 2018 2019 2020 2021 The Company assesses goodwill and other indefinite-lived intangible assets for impairment annually (or more frequently if impairment indicators arise). The Company has chosen to perform this annual impairment assessment as of October 1 of each year. In testing goodwill for impairment, the Company first assesses qualitative factors in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. After assessing the qualitative factors, if the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount then the Company does not perform the two-step impairment test. If the Company concludes otherwise, then it performs the first step of the two-step impairment test as described in ASC Topic 350. In the first step, the fair value of the reporting unit is compared to its carrying value. If the fair value of the reporting unit exceeds the carrying value of its net assets, goodwill is not considered impaired and no further testing is required. If the carrying value of the net assets exceeds the fair value of the reporting unit, a second step of the impairment assessment is performed in order to determine the implied fair value of a reporting unit's goodwill. Determining the implied fair value of goodwill requires a valuation of the reporting unit's tangible and intangible assets and liabilities in a manner similar to the allocation of purchase price in a business combination. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of its goodwill, goodwill is deemed impaired and is written down to the extent of the difference. Based on the results of the annual assessment, the Company concluded that as of October 1, 2016, it was more likely than not that the fair value of its reporting units was greater than their carrying value (although the $26 million of goodwill at the Company’s Brazil reporting unit continues to be closely monitored due to recent trends and increased volatility experienced in this reporting unit, such as continued slow economic growth, heightened competition and possible future negative economic growth). The results of the Company’s impairment testing in the fourth quarter of 2014 indicated that the estimated fair value of the Company’s Southern Cone of South America reporting unit was less than its carrying amount. Therefore, the Company recorded a non-cash impairment charge of $33 million to write-off the remaining balance of goodwill for this reporting unit in 2014. In testing indefinite-lived intangible assets for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is impaired. After assessing the qualitative factors, if the Company determines that it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, then it would not be required to compute the fair value of the indefinite-lived intangible asset. In the event the qualitative assessment leads the Company to conclude otherwise, then it would be required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test in accordance with ASC subtopic 350-30. In performing the qualitative analysis, the Company considers various factors including net sales derived from these intangibles and certain market and industry conditions. Based on the results of this qualitative assessment, the Company concluded that as of October 1, 2016, it was more likely than not that the fair value of the indefinite-lived intangible assets was greater than their carrying value. Revenue recognition -- The Company recognizes operating revenues at the time title to the goods and all risks of ownership transfer to the customer. This transfer is considered complete when a sales agreement is in place, delivery has occurred, pricing is fixed or determinable and collection is reasonably assured. In the case of consigned inventories, the title passes and the transfer of ownership risk occurs when the goods are used by the customer. Taxes assessed by governmental authorities and collected from customers are accounted for on a net basis and excluded from revenues. Hedging instruments -- The Company uses derivative financial instruments principally to offset exposure to market risks arising from changes in commodity prices, foreign currency exchange rates and interest rates. Derivative financial instruments used by the Company consist of commodity futures and option contracts, forward currency contracts and options, interest rate swap agreements and treasury lock agreements. The Company enters into futures and option contracts, which are designated as hedges of specific volumes of commodities (primarily corn and natural gas) that will be purchased in a future month. These derivative financial instruments are recognized in the Consolidated Balance Sheets at fair value. The Company has also entered into interest rate swap agreements that effectively convert the interest rate on certain fixed rate debt to a variable interest rate and, on certain variable rate debt, to a fixed interest rate. The Company periodically enters into treasury lock agreements to lock the benchmark rate for an anticipated fixed-rate borrowing. See also Note 6 and Note 7 of the notes to the consolidated financial statements for additional information. On the date a derivative contract is entered into, the Company designates the derivative as either a hedge of variable cash flows to be paid related to interest on variable rate debt, as a hedge of market variation in the benchmark rate for a future fixed rate debt issue, as a hedge of foreign currency cash flows associated with certain forecasted commercial transactions or loans, as a hedge of certain forecasted purchases of corn, natural gas or ethanol used in the manufacturing process (“a cash-flow hedge”), or as a hedge of the fair value of certain debt obligations (“a fair-value hedge”). This process includes linking all derivatives that are designated as fair-value or cash-flow hedges to specific assets and liabilities on the Consolidated Balance Sheet, or to specific firm commitments or forecasted transactions. For all hedging relationships, the Company documents the hedging relationships and its risk-management objective and strategy for undertaking the hedge transactions, the hedging instrument, the hedged item, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed and a description of the method of measuring ineffectiveness. The Company also formally assesses both, at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows or fair values of hedged items. When it is determined that a derivative is not highly effective as a hedge or has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively. Changes in the fair value of floating-to-fixed interest rate swaps, treasury locks, commodity futures and option contracts or foreign currency forward contracts, swaps and options that are highly effective and that are designated and qualify as cash-flow hedges are recorded in other comprehensive income, net of applicable income taxes. Realized gains and losses associated with changes in the fair value of interest rate swaps and treasury locks are reclassified from accumulated other comprehensive income (“AOCI”) to the Consolidated Statement of Income over the life of the underlying debt. Gains and losses on hedges of foreign currency cash flows associated with certain forecasted commercial transactions or loans are reclassified from AOCI to the Consolidated Statement of Income when such transactions or obligations are settled. Gains and losses on commodity hedging contracts are reclassified from AOCI to the Consolidated Statement of Income when the finished goods produced using the hedged item are sold. The maximum term over which the Company hedges exposures to the variability of cash flows for commodity price risk is generally 24 months. Changes in the fair value of a fixed-to-floating interest rate swap agreement that is highly effective and that is designated and qualifies as a fair-value hedge, along with the loss or gain on the hedged debt obligation, are recorded in earnings. The ineffective portion of the change in fair value of a derivative instrument that qualifies as either a cash-flow hedge or a fair-value hedge is reported in earnings. The Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the cash flows or fair value of the hedged item, the derivative is de-designated as a hedging instrument because it is unlikely that a forecasted transaction will occur, or management determines that designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued, the Company continues to carry the derivative on the Consolidated Balance Sheet at its fair value, and gains and losses that were included in AOCI are recognized in earnings in the same line item affected by the hedged transaction and in the same period or periods during which the hedged transaction affects earnings, or in the month a hedge is determined to be ineffective. The Company uses derivative financial instruments such as foreign currency forward contracts, swaps and options to manage the transactional foreign exchange risk that is created when transactions not denominated in the functional currency of the operating unit are revalued. The changes in fair value of these derivative instruments and the offsetting changes in the value of the underlying non-functional currency denominated transactions are recorded in earnings on a monthly basis. Stock-based compensation -- The Company has a stock incentive plan that provides for stock-based employee compensation, including the granting of stock options, shares of restricted stock, restricted stock units and performance shares to certain key employees. Compensation expense is recognized in the Consolidated Statements of Income for the Company’s stock-based employee compensation plan. The plan is more fully described in Note 12 of the notes to the consolidated financial statements. Earnings per common share -- Basic earnings per common share is computed by dividing net income attributable to Ingredion by the weighted average number of shares outstanding, which totaled 72.3 million for 2016, 71.6 million for 2015 and 73.6 million for 2014. Diluted earnings per share (EPS) is computed by dividing net income attributable to Ingredion by the weighted average number of shares outstanding, including the dilutive effect of outstanding stock options and other instruments associated with long-term incentive compensation plans. The weighted average number of shares outstanding for diluted EPS calculations was 74.1 million, 73.0 million and 74.9 million for 2016, 2015 and 2014, respectively. In 2016, the number of share-based awards of common stock excluded from the calculation of weighted average number of shares outstanding for the diluted EPS because their effects were not dilutive was not material. In 2015 and 2014, approximately 0.3 million and 0.1 million share-based awards of common stock, respectively, were excluded from the calculation of the weighted average number of shares outstanding for diluted EPS because their effects were anti-dilutive. Risks and uncertainties -- The Company operates domestically and internationally. In each country, the business and assets are subject to varying degrees of risk and uncertainty. The Company insures its business and assets in each country against insurable risks in a manner that it deems appropriate. Because of this geographic dispersion, the Company believes that a loss from non-insurable events in any one country would not have a material adverse effect on the Company’s operations as a whole. Additionally, the Company believes there is no significant concentration of risk with any single customer or supplier whose failure or non-performance would materially affect the Company’s results. Recently adopted accounting standards -- In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , a new standard that changes the accounting for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. In addition, cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from other income tax cash flows. The standard also allows us to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting, clarifies that all cash payments made on an employee’s behalf for withheld shares should be presented as a financing activity on our cash flows statement, and provides an accounting policy election to account for forfeitures as they occur. The new standard is effective for us beginning January 1, 2017, with early adoption permitted. The Company elected to early adopt the new guidance in the second quarter of fiscal year 2016. The primary impact of adoption was the recognition of excess tax benefits in the Company’s provision for income taxes rather than paid-in capital for all periods in fiscal year 2016. The change in tax withholding guidance had no impact to retained earnings as of January 1, 2016, and therefore no cumulative effect was required to be recorded. The Company has elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. The Company elected to apply the presentation requirements for cash flows related to excess tax benefits prospectively, which resulted in an increase in cash provided by operating activities and a decrease in cash provided by financing activities for the year ended December 31, 2016. No changes in presentation will be made for prior years presented. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact to any of the periods presented in the Company’s consolidated cash flows statements since such cash flows have historically been presented as a financing activity. Adoption of the new standard resulted in the recognition of excess tax benefits in the Company’s provision for income taxes rather than additional paid-in-capital of $12 million for the year ended December 31, 2016, as well as an increase of 0.4 million diluted weighted average common shares outstanding for this period. The adoption of the new standard impacted the Company’s previously reported results for the first quarter of 2016 as follows: (in millions, except share and per share amounts) Three Months Ended March 31, 2016 Consolidated Statement of Income: As reported As adjusted Provision for income taxes $ $ Net income $ $ Net income attributable to Ingredion $ $ Basic earnings per common share of Ingredion $ $ Diluted earnings per common share of Ingredion $ $ Diluted weighted average common shares outstanding Consolidated Statement of Cash Flows: Cash provided by operating activities $ $ Cash provided by financing activities $ $ Consolidated Balance Sheet: Additional paid-in capital $ $ Retained earnings $ $ |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2016 | |
Acquisitions | |
Acquisitions | NOTE 3 – Acquisitions On August 3, 2015, the Company completed its acquisition of Kerr Concentrates, Inc. (“Kerr”), a privately held producer of natural fruit and vegetable concentrates for $102 million in cash. Kerr serves major food and beverage companies, flavor houses and ingredient producers from its manufacturing locations in Oregon and California. The acquisition of Kerr provided the Company with the opportunity to expand its product portfolio. The Company finalized the purchase price allocation during the first quarter of 2016, which did not have a significant impact on previously estimated amounts. On December 29, 2016, the Company completed its acquisition of TIC Gums Incorporated (“TIC Gums”), a privately held, U.S.-based company that provides advanced texture systems to the food and beverage industry for $395 million, net of cash acquired. A preliminary allocation of the purchase price to the assets acquired and liabilities assumed was made based on available information and incorporating management’s best estimates. The assets acquired and liabilities assumed in the transactions are generally recorded at their estimated acquisition date fair values, while transaction costs associated with the acquisition were expensed as incurred. All of the recorded assets and liabilities, including working capital, PP&E, goodwill and intangibles, are open to change as the Company is still in process of performing purchase accounting. The Company funded the acquisition with proceeds from borrowings under its revolving credit agreement. The results of the acquired operations will be included in the Company’s consolidated results from the respective acquisition dates forward within the North America and Asia Pacific business segments. Goodwill represents the amount by which the purchase price exceeds the estimated fair value of the net assets acquired. The goodwill of $186 million and $27 million for TIC Gums and Kerr, respectively, result from synergies and other operational benefits expected to be derived from the acquisitions. The goodwill related to each acquisition is tax deductible due to the structure of the acquisitions. The following table summarizes the finalized purchase price allocation for the acquisition of Kerr and preliminary purchase price allocation for the acquisition of TIC Gums as of August 3, 2015 and December 29, 2016, respectively: Final Preliminary (in millions) Kerr TIC Gums Working capital (excluding cash) $ $ Property, plant and equipment Other assets — Identifiable intangible assets Goodwill Total purchase price $ $ The identifiable intangible assets for the acquisition of Kerr included items such as customer relationships, proprietary technology, trade names, and noncompetition agreements. The fair values of these intangible assets were determined to be Level 3 under the fair value hierarchy. Level 3 inputs are unobservable inputs for an asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for fair value estimates to be made in situations in which there is little, if any, market activity for an asset or liability at the measurement date. The following table presents the fair values, valuation techniques, and estimated remaining useful life at the acquisition date for these Level 3 measurements (dollars in millions): Estimated Fair Value Valuation Technique Useful Life Customer Relationships $ Multi-period excess earnings method 15 years Trade Names $ Relief-from-royalty method 11 years Noncompetition Agreements $ Income Approach 3 years The fair value of customer relationships, trade names and noncompetition agreements were determined through the valuation techniques described above using various judgmental assumptions such as discount rates, royalty rates, and customer attrition rates, as applicable. The fair values of property, plant and equipment associated with the acquisitions were determined to be Level 3 under the fair value hierarchy. Property, plant and equipment values were estimated using either the cost or market approach. On November 29, 2016, the Company completed its acquisition of Shandong Huanong Specialty Corn Development Co., Ltd. (“Shandong Huanong”) in China for $12 million in cash. The acquisition of Shandong Huanong, located in Shandong Province, adds a second manufacturing facility to our operations in China. It produces starch raw material for our plant in Shanghai, which makes value-added ingredients for the food industry. The acquisition added $7 million to intangible assets, with $5 million allocated to net tangible assets. The purchase accounting is still open to finalize the valuation of the intangibles. Pro-forma results of operations for the acquisitions made in 2016 have not been presented as the effect of each acquisition individually and in aggregate would not be material to the Company’s results of operations for any periods presented. The Company incurred $3 million of pre-tax acquisition and integration costs for 2016 associated with its recent acquisitions. In 2015, the Company incurred $10 million of pre-tax acquisition and integration costs associated with the 2015 acquisitions. |
Sale of Canadian Plant
Sale of Canadian Plant | 12 Months Ended |
Dec. 31, 2016 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Sale of Canadian Plant | NOTE 4 – Sale of Canadian Plant On December 15, 2015, the Company sold its manufacturing assets in Port Colborne, Ontario, Canada for $35 million in cash. The Company recorded a pre-tax gain of $10 million on the sale, net of the write-off of goodwill of $2 million associated with the business. The Company also recorded pre-tax restructuring charges of $4 million in 2015 associated with the sale of the plant as described below. Additionally, in 2016 the Company recorded pre-tax restructuring charges of $2 million related to the Port Colborne plant sale. |
Restructuring and Impairment Ch
Restructuring and Impairment Charges | 12 Months Ended |
Dec. 31, 2016 | |
Restructuring Charges [Abstract] | |
Restructuring and Impairment Charges | NOTE 5 – Restructuring and Impairment Charges In 2016, the Company recorded $19 million of restructuring charges consisting of $11 million of employee-related severance and other costs due to the execution of global information technology (“IT”) outsourcing contracts, $6 million of employee-related severance costs associated with the Company’s optimization initiatives in North America and South America, and $2 million of costs attributable to the 2015 Port Colborne plant sale. The Company expects to incur approximately $1 million of costs associated with the IT outsourcing project in 2017. On September 8, 2015, the Company announced that it planned to consolidate its manufacturing network in Brazil. Production at plants in Trombudo Central and Conchal has ceased and has been moved to plants in Balsa Nova and Mogi Guaçu, respectively. The Company recorded total pre-tax restructuring-related charges of $12 million related to these plant closures in 2015, consisting of a $10 million charge for impaired assets and $2 million of employee severance-related costs. The Company also recorded pre-tax restructuring charges of $4 million in 2015, of which $2 million was for estimated employee severance-related costs, associated with the Port Colborne plant sale. Additionally in 2015, the Company recorded a pre-tax restructuring charge of $12 million for employee severance-related costs associated with the Penford acquisition. A summary of the Company’s severance accrual at December 31, 2016 is as follows (in millions): Balance in severance accrual at December 31, 2015 $ Restructuring charge for employee severance costs: IT transformation North America and South America employee-related severance Payments made to terminated employees Balance in severance accrual at December 31, 2016 $ The severance accrual at December 31, 2016 is expected to be paid within the next twelve months. The Company assesses goodwill and other indefinite-lived intangible assets for impairment annually (or more frequently if impairment indicators arise) as of October 1 of each year. No goodwill impairment was recognized in either the fourth quarter of 2016 or 2015 related to the Company’s annual impairment testing. The results of the Company’s impairment testing in the fourth quarter of 2014 indicated that the estimated fair value of the Company’s Southern Cone of South America reporting unit was less than its carrying amount. Therefore, the Company recorded a non-cash impairment charge of $33 million in the fourth quarter of 2014 to write-off the remaining balance of goodwill for this reporting unit. |
Financial Instruments, Derivati
Financial Instruments, Derivatives and Hedging Activities | 12 Months Ended |
Dec. 31, 2016 | |
Financial Instruments, Derivatives and Hedging Activities | |
Financial Instruments, Derivatives and Hedging Activities | NOTE 6 – Financial Instruments, Derivatives and Hedging Activities The Company is exposed to market risk stemming from changes in commodity prices (corn and natural gas), foreign currency exchange rates and interest rates. In the normal course of business, the Company actively manages its exposure to these market risks by entering into various hedging transactions, authorized under established policies that place clear controls on these activities. These transactions utilize exchange-traded derivatives or over-the-counter derivatives with investment-grade counterparties. Derivative financial instruments currently used by the Company consist of commodity futures, options and swap contracts, foreign currency forward contracts, swaps and options, and interest rate swaps. Commodity price hedging: The Company’s principal use of derivative financial instruments is to manage commodity price risk in North America relating to anticipated purchases of corn and natural gas to be used in the manufacturing process, generally over the next twelve to twenty-four months. The Company maintains a commodity-price risk management strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by commodity-price volatility. For example, the manufacturing of the Company’s products requires a significant volume of corn and natural gas. Price fluctuations in corn and natural gas cause the actual purchase price of corn and natural gas to differ from anticipated prices. To manage price risk related to corn purchases in North America, the Company uses corn futures and options contracts that trade on regulated commodity exchanges to lock in its corn costs associated with firm-priced customer sales contracts. The Company uses over-the-counter gas swaps to hedge a portion of its natural gas usage in North America. These derivative financial instruments limit the impact that volatility resulting from fluctuations in market prices will have on corn and natural gas purchases and have been designated as cash-flow hedges. Effective with the acquisition of Penford, the Company now produces and sells ethanol. The Company now enters into futures contracts to hedge price risk associated with fluctuations in market prices of ethanol. Unrealized gains and losses associated with marking the commodity hedging contracts to market (fair value) are recorded as a component of other comprehensive income (“OCI”) and included in the equity section of the Consolidated Balance Sheets as part of AOCI. These amounts are subsequently reclassified into earnings in the same line item affected by the hedged transaction and in the same period or periods during which the hedged transaction affects earnings, or in the month a hedge is determined to be ineffective. The Company assesses the effectiveness of a commodity hedge contract based on changes in the contract’s fair value. The changes in the market value of such contracts have historically been, and are expected to continue to be, highly effective at offsetting changes in the price of the hedged items. The amounts representing the ineffectiveness of these cash-flow hedges are not significant. At December 31, 2016, the amount included in AOCI relating to these commodities-related derivative instruments designated as cash-flow hedges was not significant. At December 31, 2015, AOCI included $21 million of losses (net of tax of $10 million), pertaining to commodities-related derivative instruments designated as cash-flow hedges. Interest rate hedging : The Company assesses its exposure to variability in interest rates by identifying and monitoring changes in interest rates that may adversely impact future cash flows and the fair value of existing debt instruments, and by evaluating hedging opportunities. The Company maintains risk management control systems to monitor interest rate risk attributable to both the Company’s outstanding and forecasted debt obligations as well as the Company’s offsetting hedge positions. The risk management control systems involve the use of analytical techniques, including sensitivity analysis, to estimate the expected impact of changes in interest rates on future cash flows and the fair value of the Company’s outstanding and forecasted debt instruments. Derivative financial instruments that have been used by the Company to manage its interest rate risk consist of Treasury Lock agreements (“T-Locks”) and interest rate swaps. The Company periodically enters into T-Locks to fix the benchmark component of the interest rate to be established for certain planned fixed-rate debt issuances. The T-Locks are designated as hedges of the variability in cash flows associated with future interest payments caused by market fluctuations in the benchmark interest rate until the fixed interest rate is established, and are accounted for as cash-flow hedges. Accordingly, changes in the fair value of the T-Locks are recorded to AOCI until the consummation of the underlying debt offering, at which time any realized gain (loss) is amortized to earnings over the life of the debt. The net gain or loss recognized in earnings during 2016, 2015 and 2014 was not significant. The Company also, from time to time, enters into interest rate swap agreements that effectively convert the interest rate on certain fixed-rate debt to a variable rate. These swaps call for the Company to receive interest at a fixed rate and to pay interest at a variable rate, thereby creating the equivalent of variable-rate debt. The Company designates these interest rate swap agreements as hedges of the changes in fair value of the underlying debt obligation attributable to changes in interest rates and accounts for them as fair-value hedges. Changes in the fair value of interest rate swaps designated as hedging instruments that effectively offset the variability in the fair value of outstanding debt obligations are reported in earnings. These amounts offset the gain or loss (that is, the change in fair value) of the hedged debt instrument that is attributable to changes in interest rates (that is, the hedged risk) which is also recognized in earnings. The Company did not have any T-Locks outstanding at December 31, 2016 or 2015. At December 31, 2016 and 2015, AOCI included $4 million of losses (net of income taxes of $2 million) and $5 million of losses (net of income taxes of $2 million), respectively, related to settled T-Locks. These deferred losses are being amortized to financing costs over the terms of the senior notes with which they are associated. In September 2014, the Company entered into interest rate swap agreements that effectively convert the interest rates on its 6.0 percent $200 million senior notes due April 15, 2017, its 1.8 percent $300 million senior notes due September 25, 2017 and on $200 million of its $400 million 4.625 percent senior notes due November 1, 2020, to variable rates. These swap agreements call for the Company to receive interest at the fixed coupon rate of the respective notes and to pay interest at a variable rate based on the six-month US dollar LIBOR rate plus a spread. The Company has designated these interest rate swap agreements as hedges of the changes in fair value of the underlying debt obligations attributable to changes in interest rates and accounts for them as fair-value hedges. The fair value of these interest rate swap agreements was $3 million and $7 million at December 31, 2016 and 2015, respectively, and is reflected in the Consolidated Balance Sheets within Other assets, with an offsetting amount recorded in Long-term debt to adjust the carrying amount of the hedged debt obligations. Foreign currency hedging : Due to the Company’s global operations, including many emerging markets, it is exposed to fluctuations in foreign currency exchange rates. As a result, the Company has exposure to translational foreign exchange risk when the results of its foreign operations are translated to US dollars and to transactional foreign exchange risk when transactions not denominated in the functional currency are revalued. The Company primarily uses derivative financial instruments such as foreign currency forward contracts, swaps and options to manage its transactional foreign exchange risk. At December 31, 2016, the Company had foreign currency forward sales contracts with an aggregate notional amount of $432 million and foreign currency forward purchase contracts with an aggregate notional amount of $227 million that hedged transactional exposures. At December 31, 2015, the Company had foreign currency forward sales contracts with an aggregate notional amount of $606 million and foreign currency forward purchase contracts with an aggregate notional amount of $287 million that hedged transactional exposures. The fair values of these derivative instruments were assets of $5 million and $10 million at December 31, 2016 and 2015, respectively. The Company also has foreign currency derivative instruments that hedge certain foreign currency transactional exposures and are designated as cash-flow hedges. The amounts included in AOCI relating to these hedges at both December 31, 2016 and 2015 were not significant. By using derivative financial instruments to hedge exposures, the Company exposes itself to credit risk and market risk. Credit risk is the risk that the counterparty will fail to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, it does not possess credit risk. The Company minimizes the credit risk in derivative instruments by entering into over-the-counter transactions only with investment grade counterparties or by utilizing exchange-traded derivatives. Market risk is the adverse effect on the value of a financial instrument that results from a change in commodity prices, interest rates or foreign exchange rates. The market risk associated with commodity-price, interest rate or foreign exchange contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. The fair value and balance sheet location of the Company’s derivative instruments, presented gross in the Condensed Consolidated Balance sheets, are reflected below: Fair Value of Derivative Instruments Fair Value Fair Value Derivatives designated as At At At At hedging instruments: Balance Sheet December 31, December 31, Balance Sheet December 31, December 31, (in millions) Location 2016 2015 Location 2016 2015 Commodity and foreign currency Accounts receivable-net $ $ Accounts payable and accrued liabilities $ $ Commodity, foreign currency, and interest rate contracts Other assets Non-current liabilities Total $ $ $ $ At December 31, 2016, the Company had outstanding futures and option contracts that hedged the forecasted purchase of approximately 122 million bushels of corn and 41 million pounds of soybean oil. The Company is unable to directly hedge price risk related to co-product sales; however, it occasionally enters into hedges of soybean oil (a competing product to corn oil) in order to mitigate the price risk of corn oil sales. The Company also had outstanding swap and option contracts that hedged the forecasted purchase of approximately 20 million mmbtu’s of natural gas at December 31, 2016. Additionally at December 31, 2016, the Company had outstanding ethanol futures contracts that hedged the forecasted sale of approximately 10 million gallons of ethanol. Additional information relating to the Company’s derivative instruments is presented below (in millions, pre-tax): Derivatives in Amount of Losses Location of Losses Amount of Losses Cash-Flow Recognized in OCI Reclassified from Reclassified from AOCI into Income Hedging Year Ended Year Ended Year Ended AOCI Year Ended Year Ended Year Ended Relationships December 31, 2016 December 31, 2015 December 31, 2014 into Income December 31, 2016 December 31, 2015 December 31, 2014 Commodity and foreign currency contracts $ $ $ Gross profit $ $ $ Interest rate contracts — — Financing costs, net Total $ $ $ $ $ $ At December 31, 2016, AOCI included approximately $1 million of losses (net of tax), on commodities-related derivative instruments designated as cash-flow hedges that are expected to be reclassified into earnings during the next twelve months. Transactions and events expected to occur over the next twelve months that will necessitate reclassifying these derivative losses to earnings include the sale of finished goods inventory that includes previously hedged purchases of corn, natural gas and ethanol. The Company expects the losses to be offset by changes in the underlying commodities cost. Additionally at December 31, 2016, AOCI included $1 million of losses (net of tax) on settled T-Locks and $1 million of losses (net of tax) related to foreign currency hedges, which are expected to be reclassified into earnings during the next twelve months. Cash-flow hedges discontinued during 2016 or 2015 were not significant. Presented below are the fair values of the Company’s financial instruments and derivatives for the periods presented: As of December 31, 2016 As of December 31, 2015 (in millions) Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Available for sale securities $ $ $ — $ — $ $ $ — $ — Derivative assets — — Derivative liabilities — — Long-term debt — — — — Level 1 inputs consist of quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly for substantially the full term of the financial instrument. Level 2 inputs are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability or can be derived principally from or corroborated by observable market data. Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available, thereby allowing for fair value estimates to be made in situations in which there is little, if any, market activity for the asset or liability at the measurement date. The carrying values of cash equivalents, short-term investments, accounts receivable, accounts payable and short-term borrowings approximate fair values. Commodity futures, options and swap contracts are recognized at fair value. Foreign currency forward contracts, swaps and options are also recognized at fair value. The fair value of the Company’s long-term debt is estimated based on quotations of major securities dealers who are market makers in the securities. Presented below are the carrying amounts and the fair values of the Company’s long-term debt at December 31, 2016 and 2015. 2016 2015 Carrying Fair Carrying Fair (in millions) amount value amount value 3.2% senior notes due October 1, 2026 $ $ $ — $ — 4.625% senior notes due November 1, 2020 1.8% senior notes due September 25, 2017 6.625% senior notes due April 15, 2037 6.0% senior notes due April 15, 2017 5.62% senior notes due March 25, 2020 U.S. revolving credit facility replaced October 2016 — — Term loan repaid September 2016 — — Fair value adjustment related to hedged fixed rate debt instruments — — Total long-term debt $ $ $ $ |
Financing Arrangements
Financing Arrangements | 12 Months Ended |
Dec. 31, 2016 | |
Debt | |
Financing Arrangements | NOTE 7 – Financing Arrangements The Company had total debt outstanding of $1.96 billion and $1.84 billion at December 31, 2016 and 2015, respectively. Short-term borrowings at December 31, 2016 and 2015 consist primarily of amounts outstanding under various unsecured local country operating lines of credit. Short-term borrowings consist of the following at December 31: (in millions) 2016 2015 Short-term borrowings in various currencies (at rates ranging from 1% to 7% for 2016 and 2% to 6% for 2015) $ $ On September 22, 2016, the Company issued 3.2 percent Senior Notes due October 1, 2026 in an aggregate principal amount of $500 million. These notes are unsecured obligations of the Company and rank equally with all of the Company’s other existing and future unsecured, senior indebtedness. Interest on the notes is required to be paid semi-annually in arrears on April 1 and October 1 of each year, commencing April 1, 2017. The Company may redeem these notes at its option, at any time in whole or from time to time in part, at the redemption prices set forth in the supplemental indenture pursuant to which these notes were issued. The net proceeds from the sale of the notes of approximately $497 million were used to repay the $350 million due under the Company’s Term Loan Credit Agreement, plus accrued interest, to repay $52 million of borrowings under the Company’s previously existing $1 billion revolving credit facility and for general corporate purposes. On October 11, 2016, the Company entered into a new five-year, senior, unsecured $1 billion revolving credit agreement (the “Revolving Credit Agreement”) that replaced our previously existing $1 billion senior unsecured revolving credit facility that would have matured on October 22, 2017. Subject to certain terms and conditions, the Company may increase the amount of the revolving facility under the Revolving Credit Agreement by up to $500 million in the aggregate. The Company may also obtain up to two one-year extensions of the maturity date of the Revolving Credit Agreement at its requests and subject to the agreement of the lenders. All committed pro rata borrowings under the revolving facility will bear interest at a variable annual rate based on the LIBOR or base rate, at the Company’s election, subject to the terms and conditions thereof, plus, in each case, an applicable margin based on the Company’s leverage ratio (as reported in the financial statements delivered pursuant to the Revolving Credit Agreement) or the Company’s credit rating. Subject to specified conditions, the Company may designate one or more of its subsidiaries as additional borrowers under the Revolving Credit Agreement provided that the Company guarantees all borrowings and other obligations of any such subsidiaries thereunder. The Revolving Credit Agreement contains customary representations, warranties, covenants, events of default, terms and conditions, including limitations on liens, incurrence of subsidiary debt and mergers. The Company must also comply with a leverage ratio covenant and an interest coverage ratio covenant. The occurrence of an event of default under the Revolving Credit Agreement could result in all loans and other obligations under the agreement being declared due and payable and the revolving credit facility being terminated. At December 31, 2016, there were no borrowings outstanding under the Revolving Credit Agreement. In addition to borrowing availability under its Revolving Credit Agreement, the Company has approximately $443 million of unused operating lines of credit in the various foreign countries in which it operates. Long-term debt, net of related discounts, premiums and debt issuance costs consists of the following at December 31: (in millions) 2016 2015 3.2% senior notes due October 1, 2026 $ $ — 4.625% senior notes due November 1, 2020 1.8% senior notes due September 25, 2017 6.625% senior notes due April 15, 2037 6.0% senior notes due April 15, 2017 5.62% senior notes due March 25, 2020 U.S. revolving credit facility replaced October 2016 — Term loan repaid September 2016 — Fair value adjustment related to hedged fixed rate debt instrument Total $ $ Less: current maturities — — Long-term debt $ $ In the fourth quarter of 2015, the Company early adopted the provisions of ASU No. 2015-03, Interest-Imputation of Interest (Subtopic 835-30), which requires that debt issuance costs associated with a recognized debt liability be presented in the balance sheet as a direct reduction from the carrying amount of that debt in the balance sheet. Accordingly, at December 31, 2016 and 2015, debt issuance costs of $8 million and $5 million, respectively, that otherwise would have been reported as Other assets are classified as reductions of the carrying values of the related debt obligations. Deferred costs associated with the Company’s Revolving Credit Agreement remain in Other assets. The Company’s long-term debt matures as follows: $500 million in 2017, $600 million in 2020, $500 million in 2026, and $250 million in 2037. The Company’s long-term debt at December 31, 2016 includes $200 million of 6.0 percent Senior Notes that mature on April 15, 2017 and $300 million of 1.8 percent Senior Notes that mature on September 25, 2017. These borrowings are included in long-term debt at December 31, 2016 as the Company had the ability and intent to refinance the notes on a long-term basis prior to the respective maturity dates. Ingredion Incorporated guarantees certain obligations of its consolidated subsidiaries. The amount of the obligations guaranteed aggregated $121 million and $204 million at December 31, 2016 and 2015, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2016 | |
Leases | |
Leases | NOTE 8 – Leases The Company leases rail cars, certain machinery and equipment, and office space under various operating leases. Rental expense under operating leases was $53 million, $52 million and $47 million in 2016, 2015 and 2014, respectively. Minimum lease payments due on non-cancellable leases existing at December 31, 2016 are shown below: (in millions) Year Minimum Lease Payments 2017 $ 2018 2019 2020 2021 Balance thereafter |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Income Taxes | NOTE 9 – Income Taxes The components of income before income taxes and the provision for income taxes are shown below: (in millions) 2016 2015 2014 Income before income taxes: United States $ $ $ Foreign Total $ $ $ Provision for income taxes: Current tax expense US federal $ $ $ State and local Foreign Total current $ $ $ Deferred tax expense (benefit) US federal $ $ $ State and local Foreign Total deferred $ $ $ Total provision for income taxes $ $ $ Deferred income taxes are provided for the tax effects of temporary differences between the financial reporting basis and tax basis of assets and liabilities. Significant temporary differences at December 31, 2016, and 2015 are summarized as follows: (in millions) 2016 2015 Deferred tax assets attributable to: Employee benefit accruals $ $ Pensions and postretirement plans Derivative contracts Net operating loss carryforwards Foreign tax credit carryforwards Other Gross deferred tax assets $ $ Valuation allowance Net deferred tax assets $ $ Deferred tax liabilities attributable to: Property, plant and equipment $ $ Identified intangibles Gross deferred tax liabilities $ $ Net deferred tax liabilities $ $ Of the $18 million of tax-effected net operating loss carryforwards at December 31, 2016, approximately $8 million are for state loss carryforwards. Income tax accounting requires that a valuation allowance be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. In making this assessment, management considers the level of historical taxable income, scheduled reversal of deferred tax liabilities, tax planning strategies, tax carryovers and projected future taxable income. At December 31, 2016, the Company maintains valuation allowances of $8 million for state loss carryforwards, $2 million for state credits and $9 million for foreign loss carryforwards that management has determined will more likely than not expire prior to realization. In addition, the company maintains valuation allowances on foreign subsidiaries net deferred tax assets of $2 million. A reconciliation of the US federal statutory tax rate to the Company’s effective tax rate follows: 2016 2015 2014 Provision for tax at US statutory rate % % % Tax rate difference on foreign income State and local taxes — net Nondeductible goodwill impairment — Southern Cone — — Tax impact of fluctuations in Mexican Pesos to US Dollar Net tax impact of US foreign tax credits Net tax impact of US / Canada settlement — — Other items — net Provision at effective tax rate % % % The Company has significant operations in Canada, Mexico and Pakistan where the statutory tax rates are 25 percent, 30 percent and 31 percent in 2016, respectively. In addition, the Company's subsidiary in Brazil has a statutory tax rate of 34 percent, before local incentives that vary each year. The Company uses the US dollar as the functional currency for its subsidiaries in Mexico. Because of the decline in the value of the Mexican peso versus the US dollar in 2016 and 2015, the Mexican tax provision includes increased tax expense of approximately $18 million or 2.4 percentage points on the effective tax rate in 2016, and $17 million or 2.87 percentage points on the effective tax rate in 2015. These impacts are largely associated with foreign currency translation gains for local tax purposes on net US dollar monetary assets held in Mexico for which there is no corresponding gain in pre-tax income. The Company has been pursuing relief from double taxation under the US and Canadian tax treaty for the years 2004 through 2013. During the fourth quarter of 2016, a tentative agreement was reached between the US and Canada for the specific issues being contested. The Company has established a net reserve of $24 million, or 3.17 percentage points on the effective tax rate in 2016. In addition, as a result of the settlement, for the years 2014-2016, the Company has established a net reserve for $7 million, or 0.97 percentage points, on the effective tax rate in 2016. Of this amount, $4 million pertains to 2016. During 2015, an audit was settled at a National Starch subsidiary related to a pre-acquisition period for which we are indemnified by Akzo Nobel N.V. (“Akzo”). In the third quarter of 2014, the Company recognized increased tax expense to reserve approximately $7 million ($5 million of tax and $2 million of interest) or 1.3 percentage points in the effective tax rate for the audit. In the third quarter of 2015 the reserve was reduced by approximately $4 million ($3 million of tax and $1 million of interest) which resulted in a decrease of 0.7 percentage points in the 2015 effective tax rate. These impacts are included in the rate reconciliation as “Other”. The $7 million of tax expense and $4 million of reduced tax expense were recorded in the tax provision of the subsidiary, while the reimbursement from Akzo under the indemnity is recorded as other income, which results in no impact in net income for all periods. Provisions are made for estimated US and foreign income taxes, less credits that may be available, on distributions from foreign subsidiaries to the extent dividends are anticipated. No provision has been made for income taxes on approximately $2.7 billion of undistributed earnings of foreign subsidiaries at December 31, 2016, as such amounts are considered permanently reinvested. It is not practicable to estimate the additional income taxes, including applicable withholding taxes and credits that would be due upon the repatriation of these earnings. A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, for 2016 and 2015 is as follows: (in millions) 2016 2015 Balance at January 1 $ $ Additions for tax positions related to prior years — Reductions for tax positions related to prior years Additions based on tax positions related to the current year Reductions related to a lapse in the statute of limitations Balance at December 31 $ $ Of the $86 million of unrecognized tax benefits at December 31, 2016, $29 million represents the amount that, if recognized, could affect the effective tax rate in future periods. The remaining $57 million includes an offset of $52 million for an income tax receivable and $4 million of federal benefit that would be created as part of the Canada and US process described previously. The Company accounts for interest and penalties related to income tax matters within the provision for income taxes. The Company has accrued $9 million of interest expense related to the unrecognized tax benefits as of December 31, 2016. The accrued interest expense was $4 million as of December 31, 2015. The Company is subject to US federal income tax as well as income tax in multiple state and non-US jurisdictions. The US federal tax returns are subject to audit for the years 2013 to 2016. In general, the Company’s foreign subsidiaries remain subject to audit for years 2010 and later. It is also reasonably possible that the total amount of unrecognized tax benefits including interest and penalties will increase or decrease within twelve months of December 31, 2016. The Company has classified $72 million of the unrecognized tax benefits as current because they are expected to be resolved within the next twelve months. Of the $72 million, $26 million represents the amount that if recognized, could affect the effective tax rate in future periods. |
Benefit Plans
Benefit Plans | 12 Months Ended |
Dec. 31, 2016 | |
Net Periodic Pension and Postretirement Benefit Costs | |
Benefit plans | NOTE 10 – Benefit Plans The Company and its subsidiaries sponsor noncontributory defined benefit pension plans (qualified and non-qualified) covering a substantial portion of employees in the United States and Canada, and certain employees in other foreign countries. Plans for most salaried employees provide pay-related benefits based on years of service. Plans for hourly employees generally provide benefits based on flat dollar amounts and years of service. The Company’s general funding policy is to make contributions to the plans in amounts that comply with minimum funding requirements and are within the limits of deductibility under current tax regulations. Certain foreign countries allow income tax deductions without regard to contribution levels, and the Company’s policy in those countries is to make contributions required by the terms of the applicable plan. Included in the Company’s pension obligation are nonqualified supplemental retirement plans for certain key employees. Benefits provided under these plans are only partially funded, and payments to plan participants are made by the Company. The Company also provides healthcare and/or life insurance benefits for retired employees in the United States, Canada and Brazil. Healthcare benefits for retirees outside of the United States, Canada, and Brazil are generally covered through local government plans. On December 31, 2016, the Company merged its existing US qualified pension plans into the Ingredion Incorporated Cash Balance Plan for Salaried Employees. The Ingredion Incorporated Cash Balance Plan for Salaried Employees was renamed the Ingredion Pension Plan (“Combined Plan”). Certain US salaried employees are covered by a component of the Combined Plan which provides benefits based on service credits to the participating employees’ accounts of between 3 percent and 10 percent of base salary, bonus and overtime. On January 1, 2017, the Company amended this component of the Combined Plan to eliminate the service credit percentage increases and freeze them at the January 1, 2017 rate for eligible salaried employees. The amendment also impacted the nonqualified supplemental retirement plans. The plan amendment resulted in a reduction of the benefit obligation of $5 million as of December 31, 2016. The benefit will be recognized over the remaining life of the plan as a prior service cost benefit. In April 2016, the Company performed a pension remeasurement for one of its pension plans in Canada as a result of lump sum settlement payments made related to the Port Colborne plant sale. This plan settlement resulted in a reduction in the funded status of the Plan by $5 million. The Company recorded a pension charge of $1 million as a result of the settlement. During the first quarter of 2015, the Company amended one of its pension plans in Canada to eliminate future benefit accruals for the plan effective April 30, 2015. This plan curtailment resulted in an improvement in the funded status of the plan by approximately $9 million in the first quarter. The impact of this plan curtailment on net periodic benefit cost for the year ended December 31, 2015 was not significant. Also during the first quarter of 2015, the Company acquired certain pension and postretirement obligations and related assets as part of the Penford acquisition. In the fourth quarter of 2014, the Company amended its retiree medical plan in the US for salaried employees. This amendment provided that employees were required to meet certain age and years of service requirements through December 31, 2014 in order to continue to participate in the plan. As such, the number of eligible employees was significantly reduced. Eligible US salaried employees are provided with access to postretirement medical insurance through retirement healthcare spending accounts. US salaried employees accrue an account during employment, which can be used after employment to purchase postretirement medical insurance from the Company prior to age 65 and Medigap or Medicare HMO policies after age 65. The accounts are credited with a flat dollar amount and indexed for inflation annually during employment. These credits ceased after December 31, 2014. The accounts also accrue interest credits using a rate equal to a specified amount above the yield on five-year US Treasury notes. Employees can use the amounts accumulated in these accounts, including credited interest, to purchase postretirement medical insurance. Employees became eligible for benefits when they met minimum age and service requirements. The Company recognizes the cost of these postretirement benefits by accruing a flat dollar amount on an annual basis for each eligible US salaried employee. Pension Obligation and Funded Status -- The changes in pension benefit obligations and plan assets during 2016 and 2015, as well as the funded status and the amounts recognized in the Company’s Consolidated Balance Sheets related to the Company’s pension plans at December 31, 2016 and 2015, were as follows: US Plans Non-US Plans (in millions) 2016 2015 2016 2015 Benefit obligation At January 1 $ $ $ $ Service cost Interest cost Benefits paid Actuarial loss (gain) Business combinations / transfers — — — Curtailment / settlement / amendments Foreign currency translation — — Benefit obligation at December 31 $ $ $ $ Fair value of plan assets At January 1 $ $ $ $ Actual return on plan assets Employer contributions Benefits paid Plan settlements — — Business combinations — — — Foreign currency translation — — Fair value of plan assets at December 31 $ $ $ $ Funded status $ $ $ $ Amounts recognized in the Consolidated Balance Sheets as of December 31, 2016 and 2015 were as follows: US Plans Non-US Plans (in millions) 2016 2015 2016 2015 Non-current asset $ $ $ $ Current liabilities Non-current liabilities Net asset (liability) recognized $ $ $ $ Amounts recognized in accumulated other comprehensive loss, excluding tax effects, that have not yet been recognized as components of net periodic benefit cost at December 31, 2016 and 2015 were as follows: US Plans Non-US Plans (in millions) 2016 2015 2016 2015 Net actuarial loss $ $ $ $ Transition obligation — — Prior service credit Net amount recognized $ $ $ $ The increase in the net amount recognized in accumulated comprehensive loss at December 31, 2016 for the US plans and Non-US plans, as compared to December 31, 2015, is largely due to the effect of the decrease in discount rates used to measure the Company’s obligations under its pension plan, with an offset in the US plans for the effect of the service cost amendment to the Combined Plan described above. The accumulated benefit obligation for all defined benefit pension plans was $555 million and $541 million at December 31, 2016 and 2015, respectively. Information about plan obligations and assets for plans with an accumulated benefit obligation in excess of plan assets is as follows: US Plans Non-US Plans (in millions) 2016 2015 2016 2015 Projected benefit obligation $ $ $ $ Accumulated benefit obligation Fair value of plan assets — Components of net periodic benefit cost consist of the following for the years ended December 31, 2016, 2015 and 2014: US Plans Non-US Plans (in millions) 2016 2015 2014 2016 2015 2014 Service cost $ $ $ $ $ $ Interest cost Expected return on plan assets Amortization of actuarial loss Settlement loss (gain) — — — — Net periodic benefit cost $ $ $ — $ $ $ For the US plans, the Company estimates that net periodic benefit cost for 2017 will include approximately $1 million relating to the amortization of its accumulated actuarial gain included in accumulated other comprehensive loss at December 31, 2016. For the non-US plans, the Company estimates that net periodic benefit cost for 2017 will include approximately $2 million relating to the amortization of its accumulated actuarial loss. Actuarial gains and losses in excess of 10 percent of the greater of the projected benefit obligation or the market-related value of plan assets are recognized as a component of net periodic benefit cost over the average remaining service period of a plan’s active employees for active defined benefit pension plans and over the average remaining life of a plan’s active employees for frozen defined benefit pension plans. Total amounts recorded in other comprehensive income and net periodic benefit cost during 2016 was as follows: (in millions, pre-tax) US Plans Non-US Plans Net actuarial loss $ $ New prior service cost Amortization of actuarial loss Total recorded in other comprehensive income Net periodic benefit cost Total recorded in other comprehensive income and net periodic benefit cost $ $ The following weighted average assumptions were used to determine the Company’s obligations under the pension plans: US Plans Non-US Plans 2016 2015 2016 2015 Discount rate % % % % Rate of compensation increase % % % % The following weighted average assumptions were used to determine the Company’s net periodic benefit cost for the pension plans: US Plans Non-US Plans 2016 2015 2014 2016 2015 2014 Discount rate % % % % % % Expected long-term return on plan assets % % % % % % Rate of compensation increase % % % % % % For 2017 and 2016, the Company has assumed an expected long-term rate of return on assets of 5.75 percent in both years for US plans and approximately 4.76 percent and 5.00 percent for Canadian plans, respectively. In developing the expected long-term rate of return assumption on plan assets, which consist mainly of US and Canadian equity and debt securities, management evaluated historical rates of return achieved on plan assets and the asset allocation of the plans, input from the Company’s independent actuaries and investment consultants, and historical trends in long-term inflation rates. Projected return estimates made by such consultants are based upon broad equity and bond indices. The decrease in expected US and Non-US plan long-term rates of return on assets compared to 2015 is due to the change in our investment approach and related asset allocation in the US and Canada that occurred during 2016 to a liability-driven investment approach. As a result, a higher proportion of investments are in interest-sensitive investments (fixed income) as compared to the prior investment strategy for the US and Canada pension plans. The discount rate reflects a rate of return on high-quality fixed income investments that match the duration of the expected benefit payments. The Company has typically used returns on long-term, high-quality corporate AA bonds as a benchmark in establishing this assumption. In 2016, we changed the method used to estimate the service and interest cost components of net periodic benefit cost for certain of our defined benefit pension and postretirement benefit plans. Historically, we estimated the service and interest cost components using a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. Beginning in 2016, we have elected to use a full yield curve approach in the estimation of these components of benefit cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. Plan Assets -- The Company’s investment policy for its pension plans is to balance risk and return through diversified portfolios of fixed income securities, equity instruments, and short-term investments. Maturities for fixed income securities are managed such that sufficient liquidity exists to meet near-term benefit payment obligations. In 2016, the Company changed our investment approach for the US and Canada plans due to the funded nature of the plans to a liability-driven investment approach. As a result, a higher proportion of investments are in interest rate-sensitive investments (fixed income) as compared to the prior investment strategy. For US pension plans, the weighted average target range allocation of assets was 20-40 percent in equities, 57-79 percent in fixed income and 1-3 percent in cash and other short-term investments. The asset allocation is reviewed regularly and portfolio investments are rebalanced to the targeted allocation when considered appropriate. The Company’s weighted average asset allocation as of December 31, 2016 and 2015 for US and non-US pension plan assets is as follows: US Plans Non-US Plans Asset Category 2016 2015 2016 2015 Equity securities % % % % Debt securities % % % % Cash and other % % % % Total % % % % The fair values of the Company’s plan assets at December 31, 2016, by asset category and level in the fair value hierarchy are as follows: Fair Value Measurements at December 31, 2016 Quoted Prices in Active Markets for Significant Significant Identical Observable Unobservable Asset Category Assets Inputs Inputs (in millions) (Level 1) (Level 2) (Level 3) Total US Plans: Equity index: US ( a ) $ $ International ( b ) Fixed income index: Long bond ( c ) Cash ( d ) Total US Plans $ $ Non-US Plans: Equity index: US ( a ) $ $ Canada (e) International ( b ) Real estate ( f ) Fixed income index: Intermediate bond (g) Long bond ( h ) Other (i) Cash ( d ) Total Non-US Plans $ $ $ (a) This category consists of both passively and actively managed equity index funds that track the return of large capitalization US equities. (b) This category consists of both passively and actively managed equity index funds that track an index of returns on international developed market equities as well as infrastructure assets. (c) This category consists of an actively managed fixed income index fund that invests in a diversified portfolio of fixed-income securities with maturities generally exceeding 10 years. (d) This category represents cash or cash equivalents. (e) This category consists of an actively managed equity index fund that tracks against an index of large capitalization Canadian equities. (f) This category consists of an actively managed equity index fund that tracks against real estate investment trusts and real estate operating companies. (g) This category consists of both passively and actively managed fixed income index funds that track the return of intermediate duration government and investment grade corporate bonds. (h) This category consists of both passively and actively managed fixed income index funds that track the return of Canada government bonds, investment grade corporate bonds and hedge funds. (i) This category mainly consists of investment products provided by an insurance company that offers returns that are subject to a minimum guarantee and mutual funds. All significant pension plan assets are held in collective trusts by the Company’s US and non-US plans. The fair values of shares of collective trusts are based upon the net asset values of the funds reported by the fund managers based on quoted market prices of the underlying securities as of the balance sheet date and are considered to be Level 2 fair value measurements. This may produce a fair value measurement that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with those of other market participants, the use of different methodologies could result in different fair value measurements at the reporting date. In 2016, the Company made cash contributions of $10 million and $7 million to its US and non-US pension plans, respectively. The Company anticipates that in 2017 it will make cash contributions of $1 million and $2 million to its US and non-US pension plans, respectively. Cash contributions in subsequent years will depend on a number of factors including the performance of plan assets. The following benefit payments, which reflect anticipated future service, as appropriate, are expected to be made: (in millions) US Plans Non-US Plans 2017 $ $ 2018 2019 2020 2021 Years 2022 - 2026 The Company and certain subsidiaries also maintain defined contribution plans. The Company makes matching contributions to these plans that are subject to certain vesting requirements and are based on a percentage of employee contributions. Amounts charged to expense for defined contribution plans totaled $20 million, $17 million and $17 million in 2016, 2015 and 2014, respectively. Postretirement Benefit Plans -- The Company’s postretirement benefit plans currently are not funded. The information presented below includes plans in the United States, Brazil, and Canada. The changes in the benefit obligations of the plans during 2016 and 2015, and the amounts recognized in the Company’s Consolidated Balance Sheets at December 31, 2016 and 2015, are as follows: (in millions) 2016 2015 Accumulated postretirement benefit obligation At January 1 $ $ Service cost Interest cost Plan amendment — Actuarial loss (gain) Business combinations/ transfers — Benefits paid Foreign currency translation At December 31 $ $ Fair value of plan assets — — Funded status $ $ Amounts recognized in the Consolidated Balance Sheet consist of: (in millions) 2016 2015 Current liabilities $ $ Non-current liabilities Net liability recognized $ $ Amounts recognized in accumulated other comprehensive (income) loss, excluding tax effects, that have not yet been recognized as components of net periodic benefit cost at December 31, 2016 and 2015 were as follows: (in millions) 2016 2015 Net actuarial loss $ $ Prior service credit Net amount recognized $ $ Components of net periodic benefit cost consisted of the following for the years ended December 31, 2016, 2015 and 2014: (in millions) 2016 2015 2014 Service cost $ $ $ Interest cost Amortization of prior service credit — Net periodic benefit cost $ $ $ The Company estimates that postretirement benefit expense for these plans for 2017 will include approximately $3 million relating to the amortization of the prior service credit included in accumulated other comprehensive income at December 31, 2016. Total amounts recorded in other comprehensive income and net periodic benefit cost during 2016 was as follows: (in millions, pre-tax) 2016 2015 Net actuarial loss (gain) $ $ Amortization of prior service credit New prior service cost — Total recorded in other comprehensive income Net periodic benefit cost Total recorded in other comprehensive income and net periodic benefit cost $ $ The following weighted average assumptions were used to determine the Company’s obligations under the postretirement plans: 2016 2015 Discount rate % % The following weighted average assumptions were used to determine the Company’s net postretirement benefit cost: 2016 2015 2014 Discount rate % % % The discount rate reflects a rate of return on high-quality fixed-income investments that match the duration of expected benefit payments. The Company has typically used returns on long-term, high-quality corporate AA bonds as a benchmark in establishing this assumption. The healthcare cost trend rates used in valuing the Company’s postretirement benefit obligations are established based upon actual healthcare trends and consultation with actuaries and benefit providers. The following assumptions were used as of December 31, 2016: US Canada Brazil 2016 increase in per capita cost % % % Ultimate trend % % % Year ultimate trend reached The sensitivities of service cost and interest cost and year-end benefit obligations to changes in healthcare cost trend rates for the postretirement benefit plans as of December 31, 2016 are as follows: 2016 One-percentage point increase in trend rates: - Increase in service cost and interest cost components $ million - Increase in year-end benefit obligations $ million One-percentage point decrease in trend rates: - Decrease in service cost and interest cost components $ million - Decrease in year-end benefit obligations $ million The following benefit payments, which reflect anticipated future service, as appropriate, are expected to be made under the Company’s postretirement benefit plans: (in millions) 2017 $ 2018 2019 2020 2021 Years 2022 - 2026 $ Multiemployer Plans -- The Company participates in and contributes to one multiemployer benefit plan under the terms of a collective bargaining agreement that covers certain union-represented employees and retirees in the US. The plan covers medical and dental benefits for active hourly employees and retirees represented by the United States Steel Workers Union for certain US locations. The risks of participating in this multiemployer plan are different from single-employer plans. This plan receives contributions from two or more unrelated employers pursuant to one or more collective bargaining agreements and the assets contributed by one employer may be used to fund the benefits of all employees covered within the plan. The Company is required to make contributions to this plan as determined by the terms and conditions of the collective bargaining agreements and plan terms. For the years ended December 31, 2016, 2015 and 2014, the Company made regular contributions of $14 million, $12 million and $12 million, respectively, to this multi-employer plan. The Company cannot currently estimate the amount of multiemployer plan contributions that will be required in 2017 and future years, but these contributions could increase due to healthcare cost trends. |
Supplementary Information
Supplementary Information | 12 Months Ended |
Dec. 31, 2016 | |
Supplementary Information | |
Supplementary Information | NOTE 11 – Supplementary Information Balance Sheets (in millions) 2016 2015 Accounts receivable — net: Accounts receivable — trade $ $ Accounts receivable — other Allowance for doubtful accounts Total accounts receivable — net $ $ Inventories: Finished and in process $ $ Raw materials Manufacturing supplies Total inventories $ $ Accrued liabilities: Compensation-related costs $ $ Income taxes payable Unrecognized tax benefits Dividends payable Accrued interest Taxes payable other than income taxes Other Total accrued liabilities $ $ Non-current liabilities: Employees’ pension, indemnity and postretirement $ $ Other Total non-current liabilities $ $ Statements of Income (in millions) 2016 2015 2014 Other income - net: Gain from sale of plant $ — $ $ — Legal settlement — — Income tax indemnification (expense) income (a) — Gain from sale of investment — — Gain from sale of idled plant — — Other Other income - net $ $ $ (a) Amount fully offset by $4 million of benefit and $7 million of expense recorded in the income tax provision for 2015 and 2014, respectively. Financing costs-net: Interest expense, net of amounts capitalized (a) $ $ $ Interest income Foreign currency transaction losses Financing costs-net $ $ $ (a) Interest capitalized amounted to $4 million, $2 million and $2 million in 2016, 2015 and 2014, respectively. Statements of Cash Flow: (in millions) 2016 2015 2014 Other non-cash charges to net income: Mechanical stores expense (a) $ $ $ Share-based compensation expense Other Total other non-cash charges to net income $ $ $ (a) Represents spare parts used in the production process. Such spare parts are recorded in PP&E as part of machinery and equipment until they are utilized in the manufacturing process and expensed as a period cost. (in millions) 2016 2015 2014 Interest paid $ $ $ Income taxes paid |
Equity
Equity | 12 Months Ended |
Dec. 31, 2016 | |
Equity | |
Equity | NOTE 12 – Equity Preferred stock: The Company has authorized 25 million shares of $0.01 par value preferred stock, none of which were issued or outstanding at December 31, 2016 and 2015. Treasury stock: On December 12, 2014, the Board of Directors authorized a new stock repurchase program permitting the Company to purchase up to 5 million of its outstanding common shares from January 1, 2015 through December 12, 2019. The Company’s previously authorized stock repurchase program permitting the purchase of up to 4 million shares has been fully utilized. The parameters of the Company’s stock repurchase program are not established solely with reference to the dilutive impact of shares issued under the Company’s stock incentive plan. However, the Company expects that, over time, share repurchases will offset the dilutive impact of shares issued under the stock incentive plan. In 2016, the Company had no share repurchases of common shares in open market transactions. In 2015, the Company repurchased 435 thousand common shares in open market transactions at a cost of approximately $34 million. As part of the previous stock repurchase program, the Company entered into an accelerated share repurchase agreement ("ASR") on July 30, 2014 with an investment bank under which the Company repurchased $300 million of its common stock. The Company paid the $300 million on August 1, 2014 and received an initial delivery of shares from the investment bank of 3,152,502 shares, representing approximately 80 percent of the shares anticipated to be repurchased based on current market prices at that time. The ASR was initially accounted for as an initial stock purchase transaction and a forward stock purchase contract. The initial delivery of shares resulted in an immediate reduction in the number of shares used to calculate the weighted average common shares outstanding for basic and diluted net earnings per share from the effective date of the ASR. On December 29, 2014, the ASR was completed and the Company received 671,823 additional shares of its common stock bringing the total amount of repurchases to 3,824,325 shares, based upon the volume-weighted average price of $78.45 per share over the term of the share repurchase agreement. The ASR was funded through a combination of cash on hand and utilization of the Company’s revolving credit agreement. Set forth below is a reconciliation of common stock share activity for the years ended December 31, 2016, 2015 and 2014: (Shares of common stock, in thousands) Issued Held in Treasury Outstanding Balance at December 31, 2013 Issuance of restricted stock units as compensation Performance shares and other share-based awards Stock options exercised — Purchase/acquisition of common stock shares — Balance at December 31, 2014 Issuance of restricted stock units as compensation — Performance shares and other share-based awards — Stock options exercised — Purchase/acquisition of common stock shares — Balance at December 31, 2015 Issuance of restricted stock units as compensation — Performance shares and other share-based awards — Stock options exercised — Purchase/acquisition of common stock shares — Balance at December 31, 2016 Share-based payments : The following table summarizes the components of the Company’s share-based compensation expense for the last three years: (in millions) 2016 2015 2014 Stock options: Pre-tax compensation expense $ $ $ Income tax (benefit) Stock option expense, net of income taxes RSUs: Pre-tax compensation expense Income tax (benefit) RSUs, net of income taxes Performance shares and other share-based awards: Pre-tax compensation expense Income tax (benefit) Performance shares and other share-based compensation expense, net of income taxes Total share-based compensation: Pre-tax compensation expense Income tax (benefit) Total share-based compensation expense, net of income taxes $ $ $ The Company has a stock incentive plan (“SIP”) administered by the compensation committee of its Board of Directors that provides for the granting of stock options, restricted stock, restricted stock units and other share-based awards to certain key employees. A maximum of 8 million shares were originally authorized for awards under the SIP. As of December 31, 2016, 4.5 million shares were available for future grants under the SIP. Shares covered by awards that expire, terminate or lapse will again be available for the grant of awards under the SIP. Stock Options: The Company grants nonqualified options to purchase shares of the Company’s common stock. The stock options have a ten-year life and are exercisable upon vesting, which occurs evenly over a three-year period at the anniversary dates of the date of grant. Compensation expense is generally recognized on a straight-line basis for all awards over the employee’s vesting period or over a one-year required service period for certain retirement eligible executive level employees. The Company estimates a forfeiture rate at the time of grant and updates the estimate within the amount of compensation costs recognized in each period. As of December 31, 2016, certain of these nonqualified options have been forfeited due to the termination of employees. The fair value of stock option awards was estimated at the grant dates using the Black-Scholes option-pricing model with the following assumptions: 2016 2015 2014 Expected life (in years) Risk-free interest rate % % % Expected volatility % % % Expected dividend yield % % % The expected life of options represents the weighted-average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and the Company’s historical exercise patterns. The risk-free interest rate is based on the US Treasury yield curve in effect at the time of the grant for periods corresponding with the expected life of the options. Expected volatility is based on historical volatilities of the Company’s common stock. Dividend yields are based on historical dividend payments. The weighted average fair value of options granted during 2016, 2015 and 2014 was estimated to be $18.73, $16.04 and $12.99, respectively. A summary of stock option transactions for the year follows: Weighted Average Average Aggregate Exercise Remaining Intrinsic (dollars and options in thousands, Number of Price per Contractual Value except per share amounts) Options Share Term (Years) (in millions) Outstanding at December 31, 2015 $ $ Granted Exercised Cancelled Outstanding at December 31, 2016 $ $ Exercisable at December 31, 2016 $ The intrinsic values of stock options exercised during 2016, 2015 and 2014 were approximately $46 million, $27 million and $26 million, respectively. For the years ended December 31, 2016, 2015 and 2014, cash received from the exercise of stock options was $29 million, $21 million and $20 million, respectively. The excess income tax benefit realized from share-based compensation was $12 million, $8 million and $6 million in 2016, 2015 and 2014, respectively. As of December 31, 2016, the unrecognized compensation cost related to non-vested stock options totaled $4 million, which is expected to be amortized over the weighted-average period of approximately 1.3 years. Restricted Stock Units: In addition to stock options, the Company awards shares of restricted stock units (“RSUs”) to certain key employees. The RSUs issued under the plan are subject to cliff vesting, generally after three years provided the employee remains in the service of the Company. Compensation expense is generally recognized on a straight-line basis for all awards over the employee’s vesting period or over a one-year required service period for certain retirement eligible executive level employees. The Company estimates a forfeiture rate at the time of grant and updates the estimate within the amount of compensation costs recognized in each period. The fair value of the RSUs is determined based upon the number of shares granted and the quoted market price of the Company’s common stock at the date of the grant. The following table summarizes RSU activity for the year: Weighted Number of Average Restricted Fair Value (shares in thousands) Shares per Share Non-vested at December 31, 2015 $ Granted Vested Cancelled Non-vested at December 31, 2016 $ The total fair value of RSUs that vested in 2016, 2015 and 2014 was $15 million, $13 million and $11 million, respectively. At December 31, 2016, the total remaining unrecognized compensation cost related to RSUs was $14 million which will be amortized on a weighted-average basis over approximately 1.7 years. Recognized compensation cost related to unvested RSUs is included in share-based payments subject to redemption in the Consolidated Balance Sheets and totaled $21 million and $17 million at December 31, 2016 and 2015, respectively. Performance Shares: The Company has a long-term incentive plan for senior management in the form of performance shares. The ultimate payments for performance shares awarded and eventually paid will be based solely on the total shareholder return on the Company’s stock as compared to the total shareholder return on the stock of a peer group. The final payments will be calculated at the end of the three year period and are subject to approval by management and the Compensation Committee. Compensation expense is based on the fair value of the performance shares at the grant date, established using a Monte Carlo simulation model. The total compensation expense for these awards is amortized over a three-year graded vesting schedule. For the year ended December 31, 2016, the Company awarded 44 thousand performance shares at a weighted average fair value of $131.34. The Company awarded 47 thousand, 58 thousand, and 45 thousand performance shares in 2015, 2014 and 2013, respectively. The number of shares that ultimately vest can range from zero to 200 percent of the awarded grant depending on the Company’s stock performance as compared to the stock performance of the peer group. The weighted average fair value of the shares granted during 2015, 2014 and 2013 was $77.54, $52.03 and $67.19, respectively. The 2013 performance share award vested in February 2016, achieving a 200 percent pay out of the grant, or 90 thousand total vested shares. As of December 31, 2016, the performance awards granted in 2014 and 2015 are estimated to pay out at 200 percent. The 2016 granted performance award is estimated to pay out at 160 percent. There were no share cancellations during the year ended December 31, 2016. As of December 31, 2016, the unrecognized compensation cost relating to these plans was $3 million, which will be amortized over the remaining requisite service periods of 1.8 years. Recognized compensation cost related to these unvested awards is included in share-based payments subject to redemption in the Consolidated Balance Sheets and totaled $9 million and $7 million at December 31, 2016 and 2015, respectively. Other share-based awards under the SIP: Under the compensation agreement with the Board of Directors, $110,000 of a director’s annual retainer and 50 percent of the additional retainers paid to the Lead Director and the Chairmen of committees of the Board of Directors are awarded in shares of common stock or restricted units based on each director’s elections to receive his or her compensation or a portion thereof in the form of restricted units. These restricted units vest immediately, but cannot be transferred until a date not less than six months after the director’s termination of service from the board at which time the restricted units will be settled by delivering shares of common stock. The compensation expense relating to this plan included in the Consolidated Statements of Income was approximately $1 million in 2016, 2015 and 2014. At December 31, 2016, there were approximately 175,000 restricted units outstanding under this plan at a carrying value of approximately $9 million. Accumulated Other Comprehensive Loss: A summary of accumulated other comprehensive income (loss) for the years ended December 31, 2014, 2015 and 2016 is presented below: Deferred Unrealized Accumulated Cumulative Gain/(Loss) Pension/ Gain (Loss) Other Translation on Hedging Postretirement on Comprehensive (in millions) Adjustment Activities Adjustment Investments Loss Balance, December 31, 2013 $ $ $ $ $ Losses on cash-flow hedges, net of income tax effect of $12 Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $23 Actuarial losses on pension and other postretirement obligations, settlements and plan amendments, net of income tax effect of $5 Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect of $1 Currency translation adjustment Balance, December 31, 2014 $ $ $ $ $ Losses on cash-flow hedges, net of income tax effect of $19 Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $14 Actuarial gains on pension and other postretirement obligations, settlements and plan amendments, net of income tax effect of $5 Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect Currency translation adjustment Balance, December 31, 2015 $ $ $ $ $ Losses on cash-flow hedges, net of income tax effect of $6 Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $16 Actuarial losses on pension and other postretirement obligations, settlements and plan amendments, net of income tax effect of $4 Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect Unrealized gain on investments, net of income tax effect Currency translation adjustment Balance, December 31, 2016 $ $ $ $ — $ The following table provides detail pertaining to reclassifications from AOCI into net income for the periods presented: Affected Line Item in Details about AOCI Components Amount Reclassified from AOCI Consolidated Statements (in millions) 2016 2015 2014 of Income Losses on cash-flow hedges: Commodity and foreign currency contracts $ $ $ Gross profit Interest rate contracts Financing costs, net Losses related to pension and other postretirement obligations (a) Total before-tax reclassifications $ $ $ Income tax benefit Total after-tax reclassifications $ $ $ (a) This component is included in the computation of net periodic benefit cost and affects both cost of sales and SG&A expenses on the Consolidated Statements of Income. The following table provides the computation of basic and diluted earnings per common share (“EPS”) for the periods presented. 2016 2015 2014 Net Income Net Income Net Income Available Weighted Available Weighted Available Weighted to Ingredion Average Shares Per Share to Ingredion Average Shares Per Share to Ingredion Average Shares Per Share (in millions, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS $ $ $ $ $ $ Effect of Dilutive Securities: Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards Diluted EPS $ $ $ $ $ $ |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2016 | |
Segment Information | |
Segment Information | NOTE 13 – Segment Information The Company is principally engaged in the production and sale of starches and sweeteners for a wide range of industries, and is managed geographically on a regional basis. The Company’s operations are classified into four reportable business segments: North America, South America, Asia Pacific and Europe, Middle East and Africa (“EMEA”). Its North America segment includes businesses in the United States, Canada and Mexico. The Company’s South America segment includes businesses in Brazil, Colombia, Ecuador and the Southern Cone of South America, which includes Argentina, Chile, Peru and Uruguay. Its Asia Pacific segment includes businesses in South Korea, Thailand, Malaysia, China, Japan, Indonesia, the Philippines, Singapore, India, Australia and New Zealand. The Company’s EMEA segment includes businesses in the United Kingdom, Germany, South Africa, Pakistan and Kenya. (in millions) 2016 2015 2014 Net sales to unaffiliated customers: North America $ $ $ South America Asia Pacific EMEA Total $ $ $ Operating income: North America $ $ $ South America Asia Pacific EMEA (a) Corporate (b) Subtotal Restructuring / impairment charges (c) Acquisition / integration costs Charge for fair value markup of acquired inventory — — Litigation settlement — — Gain from sale of Canadian plant — — Total $ $ $ Total assets: North America $ $ $ South America Asia Pacific EMEA Total $ $ $ Depreciation and amortization: North America $ $ $ South America Asia Pacific EMEA Total $ $ $ Capital expenditures: North America $ $ $ South America Asia Pacific EMEA Total $ $ $ a. For 2014, includes a $3 million gain from the sale of an idled plant in Kenya. b. For 2015, includes $4 million of expense relating to a tax indemnification agreement with offsetting income of $4 million recorded in the provision for income taxes. For 2014, includes $7 million of income relating to this tax indemnification agreement with an offsetting expense of $7 million recorded in the provision for income taxes (see Note 9). c. For 2016, includes $11 million of employee severance-related and other costs associated with the execution of IT outsourcing contracts, $6 million of employee severance-related costs associated with the Company’s optimization initiatives in North America and South America and $2 million of costs attributable to the Port Colborne plant sale. For 2015, includes $12 million of charges for impaired assets and restructuring costs in Brazil, $12 million of restructuring costs associated with the Penford acquisition and $4 million of restructuring costs in Canada. For 2014, includes a $33 million write-off of impaired goodwill in the Southern Cone of South America. The following table presents net sales to unaffiliated customers by country of origin for the last three years: Net Sales (in millions) 2016 2015 2014 United States $ $ $ Mexico Brazil Canada Korea Argentina Others Total $ $ $ The following table presents long-lived assets (excluding intangible assets and deferred income taxes) by country at December 31: Long-lived Assets (in millions) 2016 2015 2014 United States $ $ $ Mexico Brazil Canada Germany Thailand Korea Argentina Others Total $ $ $ |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies | |
Commitments and Contingencies | NOTE 14 – Commitments and Contingencies The Company is a party to a large number of labor claims relating to our Brazilian operations. The Company has reserved an aggregate of approximately $5 million as of December 31, 2016 in respect of these claims. These labor claims primarily relate to dismissals, severance, health and safety, work schedules and salary adjustments. The Company is currently subject to various other claims and suits arising in the ordinary course of business, including certain environmental proceedings and other commercial claims. The Company also routinely receives inquiries from regulators and other government authorities relating to various aspects of its business, including with respect to compliance with laws and regulations relating to the environment, and at any given time, the Company has matters at various stages of resolution with the applicable governmental authorities. The outcomes of these matters are not within the Company’s complete control and may not be known for prolonged periods of time. The Company does not believe that the results of currently known legal proceedings and inquires, even if unfavorable to the Company, will be material to the Company. There can be no assurance, however, that such claims, suits or investigations or those arising in the future, whether taken individually or in the aggregate, will not have a material adverse effect on the Company’s financial condition or results of operations. |
Quarterly Financial Data (Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Data (Unaudited) | |
Quarterly Financial Data (Unaudited) | Quarterl Summarized quarterly financial data is as follows: (in millions, except per share amounts) 1 st QTR 2 nd QTR 3 rd QTR 4 th QTR* 2016 Net sales before shipping and handling costs $ $ $ $ Less: shipping and handling costs Net sales $ $ $ $ Gross profit Net income attributable to Ingredion Basic earnings per common share of Ingredion $ $ $ $ Diluted earnings per common share of Ingredion $ $ $ $ (in millions, except per share amounts) 1 st QTR 2 nd QTR 3 rd QTR 4 th QTR* 2015 Net sales before shipping and handling costs $ $ $ $ Less: shipping and handling costs Net sales $ $ $ $ Gross profit Net income attributable to Ingredion Basic earnings per common share of Ingredion $ $ $ $ Diluted earnings per common share of Ingredion $ $ $ $ * Fourth quarter 2016 includes a charge of $27 million ($0.36 per diluted common share) associated with an income tax settlement, acquisition and integration costs of $1.4 million ($0.9 million after-tax, or $0.01 per diluted common share) and restructuring costs of $4.0 million ($2.5 million after-tax, or $0.03 per diluted common share) consisting of employee severance-related costs in North America and employee severance-related and other costs associated with the execution of global IT outsourcing contracts. Fourth quarter 2015 includes a charge of $3.8 million ($2.6 million after-tax, or $0.04 per diluted common share) for restructuring costs in Canada, the United States and Brazil, costs of $0.7 million ($0.6 million after-tax, or $0.01 per diluted common share) associated with the acquisition and integration of Penford and Kerr, costs of $1.8 million ($1.1 million after-tax, or $0.02 per diluted common share) relating to the sale of Kerr inventory that was adjusted to fair value at the acquisition date in accordance with business combination accounting rules, costs of $6.8 million ($4.3 million after-tax, or $0.06 per diluted common share) relating to a litigation settlement and a gain of $9.8 million ($8.9 million after-tax, or $0.12 per diluted common share) from the sale of our Port Colborne, Canada plant. |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies | |
Basis of presentation | Basis of presentation -- The consolidated financial statements consist of the accounts of the Company, including all significant subsidiaries. Intercompany accounts and transactions are eliminated in consolidation. The preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the value of purchase consideration, valuation of accounts receivable, inventories, goodwill, intangible assets and other long-lived assets, legal contingencies, guarantee obligations, and assumptions used in the calculation of income taxes, and pension and other postretirement benefits, among others. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management will adjust such estimates and assumptions when facts and circumstances dictate. Foreign currency devaluations, corn price volatility, access to difficult credit markets and adverse changes in the global economic environment have combined to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the financial statements in future periods. Assets and liabilities of foreign subsidiaries, other than those whose functional currency is the US dollar, are translated at current exchange rates with the related translation adjustments reported in equity as a component of accumulated other comprehensive income (loss). The US dollar is the functional currency for the Company’s Mexico subsidiary. Income statement accounts are translated at the average exchange rate during the period. However, significant nonrecurring items related to a specific event are recognized at the exchange rate on the date of the significant event. For foreign subsidiaries where the US dollar is the functional currency, monetary assets and liabilities are translated at current exchange rates with the related adjustment included in net income. Non-monetary assets and liabilities are translated at historical exchange rates. Although the Company hedges the predominance of its transactional foreign exchange risk (see Note 6), the Company incurs foreign currency transaction gains/losses relating to assets and liabilities that are denominated in a currency other than the functional currency. For 2016, 2015 and 2014, the Company incurred foreign currency transaction losses of $3 million, $6 million and $1 million, respectively. The Company’s accumulated other comprehensive loss included in equity on the Consolidated Balance Sheets includes cumulative translation losses of approximately $1 billion at both December 31, 2016 and 2015. |
Cash and cash equivalents | Cash and cash equivalents -- Cash equivalents consist of all instruments purchased with an original maturity of three months or less, and which have virtually no risk of loss in value. |
Inventories | Inventories -- Inventories are stated at the lower of cost or net realizable value. Costs are predominantly determined using the weighted average method. |
Investments | Investments -- Investments in the common stock of affiliated companies over which the Company does not exercise significant influence are accounted for under the cost method. In 2016, the Company invested $2 million in SweeGen Inc. which it accounts for under the cost method. In 2014, the Company sold an investment that it had accounted for under the cost method. The Company received $11 million in cash and recorded a pre-tax gain of $5 million from the sale. Investments that enable the Company to exercise significant influence, but do not represent a controlling interest, are accounted for under the equity method; such investments are carried at cost, adjusted to reflect the Company’s proportionate share of income or loss, less dividends received. The Company did not have any investments accounted for under the equity method at December 31, 2016 or 2015. The Company has equity interests in the CME Group Inc. and CBOE Holdings, Inc., which are classified as available for sale securities. The investments are carried at fair value with unrealized gains and losses recorded to other comprehensive income. The Company would recognize a loss on its investments when there is a loss in value of an investment that is other than temporary. Investments are included in Other assets in the Consolidated Balance Sheets and are not significant. |
Leases | Leases -- The Company leases rail cars, certain machinery and equipment, and office space. The Company classifies its leases as either capital or operating based on the terms of the related lease agreement and the criteria contained in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 840, Leases, and related interpretations. |
Property, plant and equipment and depreciation | Property, plant and equipment and depreciation -- Property, plant and equipment (“PP&E”) are stated at cost less accumulated depreciation. Depreciation is generally computed on the straight-line method over the estimated useful lives of depreciable assets, which range from 25 to 50 years for buildings and from 2 to 25 years for all other assets. Where permitted by law, accelerated depreciation methods are used for tax purposes. The Company reviews the recoverability of the net book value of PP&E for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable from estimated future cash flows expected to result from its use and eventual disposition. If this review indicates that the carrying values will not be recovered, the carrying values would be reduced to fair value and an impairment loss would be recognized. As required under accounting principles generally accepted in the United States, the impairment analysis for long-lived assets occurs before the goodwill impairment assessment described below. |
Goodwill and other intangible assets | Goodwill and other intangible assets -- Goodwill ($784 million and $601 million at December 31, 2016 and 2015, respectively) represents the excess of the cost of an acquired entity over the fair value assigned to identifiable assets acquired and liabilities assumed. The Company also has other intangible assets of $502 million and $410 million at December 31, 2016 and 2015, respectively. The carrying amount of goodwill by reportable business segment at December 31, 2016 and 2015 was as follows: North South Asia (in millions) America America Pacific EMEA Total Balance at December 31, 2013 $ $ $ $ $ Impairment charges — — — Currency translation — Balance at December 31, 2014 $ $ $ $ $ Acquisitions — — — Disposal — — — Currency translation — Balance at December 31, 2015 $ $ $ $ $ Acquisitions — — — Currency translation — Balance at December 31, 2016 $ $ $ $ $ Goodwill before impairment charges $ $ $ $ $ Accumulated impairment charges — Balance at December 31, 2015 $ $ $ $ $ Goodwill before impairment charges $ $ $ $ $ Accumulated impairment charges — Balance at December 31, 2016 $ $ $ $ $ The following table summarizes the Company’s other intangible assets for the periods presented: As of December 31, 2016 As of December 31, 2015 Weighted Weighted Average Average Useful Useful Accumulated Life Accumulated Life (in millions) Gross Amortization Net (years) Gross Amortization Net (years) Trademarks/tradenames $ $ — $ — $ $ — $ — Customer relationships Technology TIC Gums intangible assets (preliminary) — Various — — — — Other Total other intangible assets $ $ $ $ $ $ On December 29, 2016, the Company completed its acquisition of TIC Gums Incorporated (“TIC Gums”). A preliminary allocation of the purchase price to the assets acquired and liabilities assumed was made based on available information and incorporating management’s best estimates. The table above includes the preliminary allocation of both definite –lived and indefinite intangible assets. See Note 3 of the notes to the consolidated financial statements for additional information. For definite-lived intangible assets, the Company recognizes the cost of such amortizable assets in operations over their estimated useful lives and evaluates the recoverability of the assets whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Amortization expense related to intangible assets was $25 million in 2016, $22 million in 2015, and $14 million in 2014. Based on acquisitions completed through December 31, 2016 including the preliminary purchase price allocations for TIC Gums and Shandong Huanong Specialty Corn Development Co., Ltd., intangible asset amortization expense for the next five years is shown below. The amortization is subject to change based on finalization of the purchase accounting for both acquisitions. (in millions) Year Amortization Expense 2017 $ 2018 2019 2020 2021 The Company assesses goodwill and other indefinite-lived intangible assets for impairment annually (or more frequently if impairment indicators arise). The Company has chosen to perform this annual impairment assessment as of October 1 of each year. In testing goodwill for impairment, the Company first assesses qualitative factors in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. After assessing the qualitative factors, if the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount then the Company does not perform the two-step impairment test. If the Company concludes otherwise, then it performs the first step of the two-step impairment test as described in ASC Topic 350. In the first step, the fair value of the reporting unit is compared to its carrying value. If the fair value of the reporting unit exceeds the carrying value of its net assets, goodwill is not considered impaired and no further testing is required. If the carrying value of the net assets exceeds the fair value of the reporting unit, a second step of the impairment assessment is performed in order to determine the implied fair value of a reporting unit's goodwill. Determining the implied fair value of goodwill requires a valuation of the reporting unit's tangible and intangible assets and liabilities in a manner similar to the allocation of purchase price in a business combination. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of its goodwill, goodwill is deemed impaired and is written down to the extent of the difference. Based on the results of the annual assessment, the Company concluded that as of October 1, 2016, it was more likely than not that the fair value of its reporting units was greater than their carrying value (although the $26 million of goodwill at the Company’s Brazil reporting unit continues to be closely monitored due to recent trends and increased volatility experienced in this reporting unit, such as continued slow economic growth, heightened competition and possible future negative economic growth). The results of the Company’s impairment testing in the fourth quarter of 2014 indicated that the estimated fair value of the Company’s Southern Cone of South America reporting unit was less than its carrying amount. Therefore, the Company recorded a non-cash impairment charge of $33 million to write-off the remaining balance of goodwill for this reporting unit in 2014. In testing indefinite-lived intangible assets for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is impaired. After assessing the qualitative factors, if the Company determines that it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, then it would not be required to compute the fair value of the indefinite-lived intangible asset. In the event the qualitative assessment leads the Company to conclude otherwise, then it would be required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test in accordance with ASC subtopic 350-30. In performing the qualitative analysis, the Company considers various factors including net sales derived from these intangibles and certain market and industry conditions. Based on the results of this qualitative assessment, the Company concluded that as of October 1, 2016, it was more likely than not that the fair value of the indefinite-lived intangible assets was greater than their carrying value. |
Revenue recognition | Revenue recognition -- The Company recognizes operating revenues at the time title to the goods and all risks of ownership transfer to the customer. This transfer is considered complete when a sales agreement is in place, delivery has occurred, pricing is fixed or determinable and collection is reasonably assured. In the case of consigned inventories, the title passes and the transfer of ownership risk occurs when the goods are used by the customer. Taxes assessed by governmental authorities and collected from customers are accounted for on a net basis and excluded from revenues. |
Hedging instruments | Hedging instruments -- The Company uses derivative financial instruments principally to offset exposure to market risks arising from changes in commodity prices, foreign currency exchange rates and interest rates. Derivative financial instruments used by the Company consist of commodity futures and option contracts, forward currency contracts and options, interest rate swap agreements and treasury lock agreements. The Company enters into futures and option contracts, which are designated as hedges of specific volumes of commodities (primarily corn and natural gas) that will be purchased in a future month. These derivative financial instruments are recognized in the Consolidated Balance Sheets at fair value. The Company has also entered into interest rate swap agreements that effectively convert the interest rate on certain fixed rate debt to a variable interest rate and, on certain variable rate debt, to a fixed interest rate. The Company periodically enters into treasury lock agreements to lock the benchmark rate for an anticipated fixed-rate borrowing. See also Note 6 and Note 7 of the notes to the consolidated financial statements for additional information. On the date a derivative contract is entered into, the Company designates the derivative as either a hedge of variable cash flows to be paid related to interest on variable rate debt, as a hedge of market variation in the benchmark rate for a future fixed rate debt issue, as a hedge of foreign currency cash flows associated with certain forecasted commercial transactions or loans, as a hedge of certain forecasted purchases of corn, natural gas or ethanol used in the manufacturing process (“a cash-flow hedge”), or as a hedge of the fair value of certain debt obligations (“a fair-value hedge”). This process includes linking all derivatives that are designated as fair-value or cash-flow hedges to specific assets and liabilities on the Consolidated Balance Sheet, or to specific firm commitments or forecasted transactions. For all hedging relationships, the Company documents the hedging relationships and its risk-management objective and strategy for undertaking the hedge transactions, the hedging instrument, the hedged item, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed and a description of the method of measuring ineffectiveness. The Company also formally assesses both, at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows or fair values of hedged items. When it is determined that a derivative is not highly effective as a hedge or has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively. Changes in the fair value of floating-to-fixed interest rate swaps, treasury locks, commodity futures and option contracts or foreign currency forward contracts, swaps and options that are highly effective and that are designated and qualify as cash-flow hedges are recorded in other comprehensive income, net of applicable income taxes. Realized gains and losses associated with changes in the fair value of interest rate swaps and treasury locks are reclassified from accumulated other comprehensive income (“AOCI”) to the Consolidated Statement of Income over the life of the underlying debt. Gains and losses on hedges of foreign currency cash flows associated with certain forecasted commercial transactions or loans are reclassified from AOCI to the Consolidated Statement of Income when such transactions or obligations are settled. Gains and losses on commodity hedging contracts are reclassified from AOCI to the Consolidated Statement of Income when the finished goods produced using the hedged item are sold. The maximum term over which the Company hedges exposures to the variability of cash flows for commodity price risk is generally 24 months. Changes in the fair value of a fixed-to-floating interest rate swap agreement that is highly effective and that is designated and qualifies as a fair-value hedge, along with the loss or gain on the hedged debt obligation, are recorded in earnings. The ineffective portion of the change in fair value of a derivative instrument that qualifies as either a cash-flow hedge or a fair-value hedge is reported in earnings. The Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the cash flows or fair value of the hedged item, the derivative is de-designated as a hedging instrument because it is unlikely that a forecasted transaction will occur, or management determines that designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued, the Company continues to carry the derivative on the Consolidated Balance Sheet at its fair value, and gains and losses that were included in AOCI are recognized in earnings in the same line item affected by the hedged transaction and in the same period or periods during which the hedged transaction affects earnings, or in the month a hedge is determined to be ineffective. The Company uses derivative financial instruments such as foreign currency forward contracts, swaps and options to manage the transactional foreign exchange risk that is created when transactions not denominated in the functional currency of the operating unit are revalued. The changes in fair value of these derivative instruments and the offsetting changes in the value of the underlying non-functional currency denominated transactions are recorded in earnings on a monthly basis. |
Stock-based compensation | Stock-based compensation -- The Company has a stock incentive plan that provides for stock-based employee compensation, including the granting of stock options, shares of restricted stock, restricted stock units and performance shares to certain key employees. Compensation expense is recognized in the Consolidated Statements of Income for the Company’s stock-based employee compensation plan. The plan is more fully described in Note 12 of the notes to the consolidated financial statements. |
Earnings per common share | Earnings per common share -- Basic earnings per common share is computed by dividing net income attributable to Ingredion by the weighted average number of shares outstanding, which totaled 72.3 million for 2016, 71.6 million for 2015 and 73.6 million for 2014. Diluted earnings per share (EPS) is computed by dividing net income attributable to Ingredion by the weighted average number of shares outstanding, including the dilutive effect of outstanding stock options and other instruments associated with long-term incentive compensation plans. The weighted average number of shares outstanding for diluted EPS calculations was 74.1 million, 73.0 million and 74.9 million for 2016, 2015 and 2014, respectively. In 2016, the number of share-based awards of common stock excluded from the calculation of weighted average number of shares outstanding for the diluted EPS because their effects were not dilutive was not material. In 2015 and 2014, approximately 0.3 million and 0.1 million share-based awards of common stock, respectively, were excluded from the calculation of the weighted average number of shares outstanding for diluted EPS because their effects were anti-dilutive. |
Risks and uncertainties | Risks and uncertainties -- The Company operates domestically and internationally. In each country, the business and assets are subject to varying degrees of risk and uncertainty. The Company insures its business and assets in each country against insurable risks in a manner that it deems appropriate. Because of this geographic dispersion, the Company believes that a loss from non-insurable events in any one country would not have a material adverse effect on the Company’s operations as a whole. Additionally, the Company believes there is no significant concentration of risk with any single customer or supplier whose failure or non-performance would materially affect the Company’s results. |
Recently adopted accounting standards | Recently adopted accounting standards -- In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ("ASU") No. 2016-09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting , a new standard that changes the accounting for certain aspects of share-based payments to employees. The new guidance requires excess tax benefits and tax deficiencies to be recorded in the income statement when the awards vest or are settled. In addition, cash flows related to excess tax benefits will no longer be separately classified as a financing activity apart from other income tax cash flows. The standard also allows us to repurchase more of an employee’s shares for tax withholding purposes without triggering liability accounting, clarifies that all cash payments made on an employee’s behalf for withheld shares should be presented as a financing activity on our cash flows statement, and provides an accounting policy election to account for forfeitures as they occur. The new standard is effective for us beginning January 1, 2017, with early adoption permitted. The Company elected to early adopt the new guidance in the second quarter of fiscal year 2016. The primary impact of adoption was the recognition of excess tax benefits in the Company’s provision for income taxes rather than paid-in capital for all periods in fiscal year 2016. The change in tax withholding guidance had no impact to retained earnings as of January 1, 2016, and therefore no cumulative effect was required to be recorded. The Company has elected to continue to estimate forfeitures expected to occur to determine the amount of compensation cost to be recognized in each period. The Company elected to apply the presentation requirements for cash flows related to excess tax benefits prospectively, which resulted in an increase in cash provided by operating activities and a decrease in cash provided by financing activities for the year ended December 31, 2016. No changes in presentation will be made for prior years presented. The presentation requirements for cash flows related to employee taxes paid for withheld shares had no impact to any of the periods presented in the Company’s consolidated cash flows statements since such cash flows have historically been presented as a financing activity. Adoption of the new standard resulted in the recognition of excess tax benefits in the Company’s provision for income taxes rather than additional paid-in-capital of $12 million for the year ended December 31, 2016, as well as an increase of 0.4 million diluted weighted average common shares outstanding for this period. The adoption of the new standard impacted the Company’s previously reported results for the first quarter of 2016 as follows: (in millions, except share and per share amounts) Three Months Ended March 31, 2016 Consolidated Statement of Income: As reported As adjusted Provision for income taxes $ $ Net income $ $ Net income attributable to Ingredion $ $ Basic earnings per common share of Ingredion $ $ Diluted earnings per common share of Ingredion $ $ Diluted weighted average common shares outstanding Consolidated Statement of Cash Flows: Cash provided by operating activities $ $ Cash provided by financing activities $ $ Consolidated Balance Sheet: Additional paid-in capital $ $ Retained earnings $ $ |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies | |
Schedule of carrying amount of goodwill by geographic segment | North South Asia (in millions) America America Pacific EMEA Total Balance at December 31, 2013 $ $ $ $ $ Impairment charges — — — Currency translation — Balance at December 31, 2014 $ $ $ $ $ Acquisitions — — — Disposal — — — Currency translation — Balance at December 31, 2015 $ $ $ $ $ Acquisitions — — — Currency translation — Balance at December 31, 2016 $ $ $ $ $ Goodwill before impairment charges $ $ $ $ $ Accumulated impairment charges — Balance at December 31, 2015 $ $ $ $ $ Goodwill before impairment charges $ $ $ $ $ Accumulated impairment charges — Balance at December 31, 2016 $ $ $ $ $ |
Schedule of intangible assets | As of December 31, 2016 As of December 31, 2015 Weighted Weighted Average Average Useful Useful Accumulated Life Accumulated Life (in millions) Gross Amortization Net (years) Gross Amortization Net (years) Trademarks/tradenames $ $ — $ — $ $ — $ — Customer relationships Technology TIC Gums intangible assets (preliminary) — Various — — — — Other Total other intangible assets $ $ $ $ $ $ |
Schedule of amortization expense related to intangible assets | (in millions) Year Amortization Expense 2017 $ 2018 2019 2020 2021 |
Schedule of new accounting standards | (in millions, except share and per share amounts) Three Months Ended March 31, 2016 Consolidated Statement of Income: As reported As adjusted Provision for income taxes $ $ Net income $ $ Net income attributable to Ingredion $ $ Basic earnings per common share of Ingredion $ $ Diluted earnings per common share of Ingredion $ $ Diluted weighted average common shares outstanding Consolidated Statement of Cash Flows: Cash provided by operating activities $ $ Cash provided by financing activities $ $ Consolidated Balance Sheet: Additional paid-in capital $ $ Retained earnings $ $ |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Acquisitions | |
Summary of final purchase price allocations for Kerr | Final Preliminary (in millions) Kerr TIC Gums Working capital (excluding cash) $ $ Property, plant and equipment Other assets — Identifiable intangible assets Goodwill Total purchase price $ $ |
Schedule of fair values, valuation techniques and estimated remaining useful life of acquired intangible assets | Estimated Fair Value Valuation Technique Useful Life Customer Relationships $ Multi-period excess earnings method 15 years Trade Names $ Relief-from-royalty method 11 years Noncompetition Agreements $ Income Approach 3 years |
Restructuring and Impairment 29
Restructuring and Impairment Charges (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Restructuring Charges [Abstract] | |
Summary of restructuring reserve | A summary of the Company’s severance accrual at December 31, 2016 is as follows (in millions): Balance in severance accrual at December 31, 2015 $ Restructuring charge for employee severance costs: IT transformation North America and South America employee-related severance Payments made to terminated employees Balance in severance accrual at December 31, 2016 $ |
Financial Instruments, Deriva30
Financial Instruments, Derivatives and Hedging Activities (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Financial Instruments, Derivatives and Hedging Activities | |
Schedule of location and amount of assets and liabilities reported in balance sheet | Fair Value of Derivative Instruments Fair Value Fair Value Derivatives designated as At At At At hedging instruments: Balance Sheet December 31, December 31, Balance Sheet December 31, December 31, (in millions) Location 2016 2015 Location 2016 2015 Commodity and foreign currency Accounts receivable-net $ $ Accounts payable and accrued liabilities $ $ Commodity, foreign currency, and interest rate contracts Other assets Non-current liabilities Total $ $ $ $ |
Schedule of amount of gains and losses recognized in OCI and location and amount of gains and losses reported in income statement | Derivatives in Amount of Losses Location of Losses Amount of Losses Cash-Flow Recognized in OCI Reclassified from Reclassified from AOCI into Income Hedging Year Ended Year Ended Year Ended AOCI Year Ended Year Ended Year Ended Relationships December 31, 2016 December 31, 2015 December 31, 2014 into Income December 31, 2016 December 31, 2015 December 31, 2014 Commodity and foreign currency contracts $ $ $ Gross profit $ $ $ Interest rate contracts — — Financing costs, net Total $ $ $ $ $ $ |
Schedule of fair value of financial instruments and derivatives | As of December 31, 2016 As of December 31, 2015 (in millions) Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Available for sale securities $ $ $ — $ — $ $ $ — $ — Derivative assets — — Derivative liabilities — — Long-term debt — — — — |
Schedule of carrying amounts and fair values of long-term debt | 2016 2015 Carrying Fair Carrying Fair (in millions) amount value amount value 3.2% senior notes due October 1, 2026 $ $ $ — $ — 4.625% senior notes due November 1, 2020 1.8% senior notes due September 25, 2017 6.625% senior notes due April 15, 2037 6.0% senior notes due April 15, 2017 5.62% senior notes due March 25, 2020 U.S. revolving credit facility replaced October 2016 — — Term loan repaid September 2016 — — Fair value adjustment related to hedged fixed rate debt instruments — — Total long-term debt $ $ $ $ |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Debt | |
Schedule of short-term borrowings | (in millions) 2016 2015 Short-term borrowings in various currencies (at rates ranging from 1% to 7% for 2016 and 2% to 6% for 2015) $ $ |
Schedule of components of long-term debt | (in millions) 2016 2015 3.2% senior notes due October 1, 2026 $ $ — 4.625% senior notes due November 1, 2020 1.8% senior notes due September 25, 2017 6.625% senior notes due April 15, 2037 6.0% senior notes due April 15, 2017 5.62% senior notes due March 25, 2020 U.S. revolving credit facility replaced October 2016 — Term loan repaid September 2016 — Fair value adjustment related to hedged fixed rate debt instrument Total $ $ Less: current maturities — — Long-term debt $ $ |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Leases | |
Schedule of minimum lease payments due on leases | (in millions) Year Minimum Lease Payments 2017 $ 2018 2019 2020 2021 Balance thereafter |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Schedule of income before income taxes and provision for income taxes | (in millions) 2016 2015 2014 Income before income taxes: United States $ $ $ Foreign Total $ $ $ Provision for income taxes: Current tax expense US federal $ $ $ State and local Foreign Total current $ $ $ Deferred tax expense (benefit) US federal $ $ $ State and local Foreign Total deferred $ $ $ Total provision for income taxes $ $ $ |
Schedule of tax effects of temporary differences between financial reporting basis and tax basis of assets and liabilities | (in millions) 2016 2015 Deferred tax assets attributable to: Employee benefit accruals $ $ Pensions and postretirement plans Derivative contracts Net operating loss carryforwards Foreign tax credit carryforwards Other Gross deferred tax assets $ $ Valuation allowance Net deferred tax assets $ $ Deferred tax liabilities attributable to: Property, plant and equipment $ $ Identified intangibles Gross deferred tax liabilities $ $ Net deferred tax liabilities $ $ |
Schedule of reconciliation of US federal statutory tax rate to effective tax rate | 2016 2015 2014 Provision for tax at US statutory rate % % % Tax rate difference on foreign income State and local taxes — net Nondeductible goodwill impairment — Southern Cone — — Tax impact of fluctuations in Mexican Pesos to US Dollar Net tax impact of US foreign tax credits Net tax impact of US / Canada settlement — — Other items — net Provision at effective tax rate % % % |
Schedule of reconciliation of beginning and ending amount of unrecognized tax benefits, excluding interest and penalties | (in millions) 2016 2015 Balance at January 1 $ $ Additions for tax positions related to prior years — Reductions for tax positions related to prior years Additions based on tax positions related to the current year Reductions related to a lapse in the statute of limitations Balance at December 31 $ $ |
Benefit Plans (Tables)
Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Schedule of funded status | US Plans Non-US Plans (in millions) 2016 2015 2016 2015 Benefit obligation At January 1 $ $ $ $ Service cost Interest cost Benefits paid Actuarial loss (gain) Business combinations / transfers — — — Curtailment / settlement / amendments Foreign currency translation — — Benefit obligation at December 31 $ $ $ $ Fair value of plan assets At January 1 $ $ $ $ Actual return on plan assets Employer contributions Benefits paid Plan settlements — — Business combinations — — — Foreign currency translation — — Fair value of plan assets at December 31 $ $ $ $ Funded status $ $ $ $ |
Schedule of amounts recognized in the consolidated balance sheets | US Plans Non-US Plans (in millions) 2016 2015 2016 2015 Non-current asset $ $ $ $ Current liabilities Non-current liabilities Net asset (liability) recognized $ $ $ $ |
Schedule of amounts recognized in accumulated other comprehensive loss | US Plans Non-US Plans (in millions) 2016 2015 2016 2015 Net actuarial loss $ $ $ $ Transition obligation — — Prior service credit Net amount recognized $ $ $ $ |
Schedule of plan obligations and assets for plans with an accumulated benefit obligation in excess of plan assets | US Plans Non-US Plans (in millions) 2016 2015 2016 2015 Projected benefit obligation $ $ $ $ Accumulated benefit obligation Fair value of plan assets — |
Components of net periodic benefit cost | US Plans Non-US Plans (in millions) 2016 2015 2014 2016 2015 2014 Service cost $ $ $ $ $ $ Interest cost Expected return on plan assets Amortization of actuarial loss Settlement loss (gain) — — — — Net periodic benefit cost $ $ $ — $ $ $ |
Schedule of amounts recorded in other comprehensive income and net periodic benefit cost | (in millions, pre-tax) US Plans Non-US Plans Net actuarial loss $ $ New prior service cost Amortization of actuarial loss Total recorded in other comprehensive income Net periodic benefit cost Total recorded in other comprehensive income and net periodic benefit cost $ $ |
Schedule of weighted average assumptions used to determine the company's obligations | US Plans Non-US Plans 2016 2015 2016 2015 Discount rate % % % % Rate of compensation increase % % % % |
Schedule of weighted average assumptions used to determine the company's net periodic benefit cost | US Plans Non-US Plans 2016 2015 2014 2016 2015 2014 Discount rate % % % % % % Expected long-term return on plan assets % % % % % % Rate of compensation increase % % % % % % |
Schedule of weighted average asset allocation | US Plans Non-US Plans Asset Category 2016 2015 2016 2015 Equity securities % % % % Debt securities % % % % Cash and other % % % % Total % % % % |
Schedule of fair values of the company's plan assets, by asset category and level | The fair values of the Company’s plan assets at December 31, 2016, by asset category and level in the fair value hierarchy are as follows: Fair Value Measurements at December 31, 2016 Quoted Prices in Active Markets for Significant Significant Identical Observable Unobservable Asset Category Assets Inputs Inputs (in millions) (Level 1) (Level 2) (Level 3) Total US Plans: Equity index: US ( a ) $ $ International ( b ) Fixed income index: Long bond ( c ) Cash ( d ) Total US Plans $ $ Non-US Plans: Equity index: US ( a ) $ $ Canada (e) International ( b ) Real estate ( f ) Fixed income index: Intermediate bond (g) Long bond ( h ) Other (i) Cash ( d ) Total Non-US Plans $ $ $ (a) This category consists of both passively and actively managed equity index funds that track the return of large capitalization US equities. (b) This category consists of both passively and actively managed equity index funds that track an index of returns on international developed market equities as well as infrastructure assets. (c) This category consists of an actively managed fixed income index fund that invests in a diversified portfolio of fixed-income securities with maturities generally exceeding 10 years. (d) This category represents cash or cash equivalents. (e) This category consists of an actively managed equity index fund that tracks against an index of large capitalization Canadian equities. (f) This category consists of an actively managed equity index fund that tracks against real estate investment trusts and real estate operating companies. (g) This category consists of both passively and actively managed fixed income index funds that track the return of intermediate duration government and investment grade corporate bonds. (h) This category consists of both passively and actively managed fixed income index funds that track the return of Canada government bonds, investment grade corporate bonds and hedge funds. This category mainly consists of investment products provided by an insurance company that offers returns that are subject to a minimum guarantee and |
Schedule of benefit payments, which reflect anticipated future service, as appropriate and are expected to be made | (in millions) US Plans Non-US Plans 2017 $ $ 2018 2019 2020 2021 Years 2022 - 2026 |
Other Postretirement Benefit Plan, Defined Benefit | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Schedule of funded status | (in millions) 2016 2015 Accumulated postretirement benefit obligation At January 1 $ $ Service cost Interest cost Plan amendment — Actuarial loss (gain) Business combinations/ transfers — Benefits paid Foreign currency translation At December 31 $ $ Fair value of plan assets — — Funded status $ $ |
Schedule of amounts recognized in the consolidated balance sheets | (in millions) 2016 2015 Current liabilities $ $ Non-current liabilities Net liability recognized $ $ |
Schedule of amounts recognized in accumulated other comprehensive loss | (in millions) 2016 2015 Net actuarial loss $ $ Prior service credit Net amount recognized $ $ |
Components of net periodic benefit cost | (in millions) 2016 2015 2014 Service cost $ $ $ Interest cost Amortization of prior service credit — Net periodic benefit cost $ $ $ |
Schedule of amounts recorded in other comprehensive income and net periodic benefit cost | (in millions, pre-tax) 2016 2015 Net actuarial loss (gain) $ $ Amortization of prior service credit New prior service cost — Total recorded in other comprehensive income Net periodic benefit cost Total recorded in other comprehensive income and net periodic benefit cost $ $ |
Schedule of weighted average assumptions used to determine the company's obligations | 2016 2015 Discount rate % % |
Schedule of weighted average assumptions used to determine the company's net periodic benefit cost | 2016 2015 2014 Discount rate % % % |
Schedule of assumptions made in measuring the company's postretirement benefit obligation | US Canada Brazil 2016 increase in per capita cost % % % Ultimate trend % % % Year ultimate trend reached |
Sensitivity to Trend Assumptions | 2016 One-percentage point increase in trend rates: - Increase in service cost and interest cost components $ million - Increase in year-end benefit obligations $ million One-percentage point decrease in trend rates: - Decrease in service cost and interest cost components $ million - Decrease in year-end benefit obligations $ million |
Schedule of benefit payments, which reflect anticipated future service, as appropriate and are expected to be made | (in millions) 2017 $ 2018 2019 2020 2021 Years 2022 - 2026 $ |
Supplementary Information (Tabl
Supplementary Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Supplementary Information | |
Balance Sheets - supplementary information | (in millions) 2016 2015 Accounts receivable — net: Accounts receivable — trade $ $ Accounts receivable — other Allowance for doubtful accounts Total accounts receivable — net $ $ Inventories: Finished and in process $ $ Raw materials Manufacturing supplies Total inventories $ $ Accrued liabilities: Compensation-related costs $ $ Income taxes payable Unrecognized tax benefits Dividends payable Accrued interest Taxes payable other than income taxes Other Total accrued liabilities $ $ Non-current liabilities: Employees’ pension, indemnity and postretirement $ $ Other Total non-current liabilities $ $ |
Statements of Income - supplementary information | (in millions) 2016 2015 2014 Other income - net: Gain from sale of plant $ — $ $ — Legal settlement — — Income tax indemnification (expense) income (a) — Gain from sale of investment — — Gain from sale of idled plant — — Other Other income - net $ $ $ (a) Amount fully offset by $4 million of benefit and $7 million of expense recorded in the income tax provision for 2015 and 2014, respectively. Financing costs-net: Interest expense, net of amounts capitalized (a) $ $ $ Interest income Foreign currency transaction losses Financing costs-net $ $ $ (a) Interest capitalized amounted to $4 million, $2 million and $2 million in 2016, 2015 and 2014, respectively. |
Statements of Cash Flow - supplementary information | (in millions) 2016 2015 2014 Other non-cash charges to net income: Mechanical stores expense (a) $ $ $ Share-based compensation expense Other Total other non-cash charges to net income $ $ $ (a) Represents spare parts used in the production process. Such spare parts are recorded in PP&E as part of machinery and equipment until they are utilized in the manufacturing process and expensed as a period cost. (in millions) 2016 2015 2014 Interest paid $ $ $ Income taxes paid |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity | |
Schedule of reconciliation of common stock share activity | (Shares of common stock, in thousands) Issued Held in Treasury Outstanding Balance at December 31, 2013 Issuance of restricted stock units as compensation Performance shares and other share-based awards Stock options exercised — Purchase/acquisition of common stock shares — Balance at December 31, 2014 Issuance of restricted stock units as compensation — Performance shares and other share-based awards — Stock options exercised — Purchase/acquisition of common stock shares — Balance at December 31, 2015 Issuance of restricted stock units as compensation — Performance shares and other share-based awards — Stock options exercised — Purchase/acquisition of common stock shares — Balance at December 31, 2016 |
Schedule of stock based compensation expense | (in millions) 2016 2015 2014 Stock options: Pre-tax compensation expense $ $ $ Income tax (benefit) Stock option expense, net of income taxes RSUs: Pre-tax compensation expense Income tax (benefit) RSUs, net of income taxes Performance shares and other share-based awards: Pre-tax compensation expense Income tax (benefit) Performance shares and other share-based compensation expense, net of income taxes Total share-based compensation: Pre-tax compensation expense Income tax (benefit) Total share-based compensation expense, net of income taxes $ $ $ |
Schedule of valuation assumptions for stock options | 2016 2015 2014 Expected life (in years) Risk-free interest rate % % % Expected volatility % % % Expected dividend yield % % % |
Schedule of summary of information about outstanding and exercisable stock options, by range of exercise prices | Weighted Average Average Aggregate Exercise Remaining Intrinsic (dollars and options in thousands, Number of Price per Contractual Value except per share amounts) Options Share Term (Years) (in millions) Outstanding at December 31, 2015 $ $ Granted Exercised Cancelled Outstanding at December 31, 2016 $ $ Exercisable at December 31, 2016 $ |
Schedule of restricted unit activity | Weighted Number of Average Restricted Fair Value (shares in thousands) Shares per Share Non-vested at December 31, 2015 $ Granted Vested Cancelled Non-vested at December 31, 2016 $ |
Summary of accumulated other comprehensive loss | Deferred Unrealized Accumulated Cumulative Gain/(Loss) Pension/ Gain (Loss) Other Translation on Hedging Postretirement on Comprehensive (in millions) Adjustment Activities Adjustment Investments Loss Balance, December 31, 2013 $ $ $ $ $ Losses on cash-flow hedges, net of income tax effect of $12 Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $23 Actuarial losses on pension and other postretirement obligations, settlements and plan amendments, net of income tax effect of $5 Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect of $1 Currency translation adjustment Balance, December 31, 2014 $ $ $ $ $ Losses on cash-flow hedges, net of income tax effect of $19 Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $14 Actuarial gains on pension and other postretirement obligations, settlements and plan amendments, net of income tax effect of $5 Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect Currency translation adjustment Balance, December 31, 2015 $ $ $ $ $ Losses on cash-flow hedges, net of income tax effect of $6 Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $16 Actuarial losses on pension and other postretirement obligations, settlements and plan amendments, net of income tax effect of $4 Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect Unrealized gain on investments, net of income tax effect Currency translation adjustment Balance, December 31, 2016 $ $ $ $ — $ |
Schedule of reclassifications from AOCI into net income | Affected Line Item in Details about AOCI Components Amount Reclassified from AOCI Consolidated Statements (in millions) 2016 2015 2014 of Income Losses on cash-flow hedges: Commodity and foreign currency contracts $ $ $ Gross profit Interest rate contracts Financing costs, net Losses related to pension and other postretirement obligations (a) Total before-tax reclassifications $ $ $ Income tax benefit Total after-tax reclassifications $ $ $ |
Schedule of basic and diluted earnings per common share | 2016 2015 2014 Net Income Net Income Net Income Available Weighted Available Weighted Available Weighted to Ingredion Average Shares Per Share to Ingredion Average Shares Per Share to Ingredion Average Shares Per Share (in millions, except per share amounts) (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount (Numerator) (Denominator) Amount Basic EPS $ $ $ $ $ $ Effect of Dilutive Securities: Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards Diluted EPS $ $ $ $ $ $ |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Information | |
Schedule of segment reporting of net sales, operating income and total assets | (in millions) 2016 2015 2014 Net sales to unaffiliated customers: North America $ $ $ South America Asia Pacific EMEA Total $ $ $ Operating income: North America $ $ $ South America Asia Pacific EMEA (a) Corporate (b) Subtotal Restructuring / impairment charges (c) Acquisition / integration costs Charge for fair value markup of acquired inventory — — Litigation settlement — — Gain from sale of Canadian plant — — Total $ $ $ Total assets: North America $ $ $ South America Asia Pacific EMEA Total $ $ $ Depreciation and amortization: North America $ $ $ South America Asia Pacific EMEA Total $ $ $ Capital expenditures: North America $ $ $ South America Asia Pacific EMEA Total $ $ $ a. For 2014, includes a $3 million gain from the sale of an idled plant in Kenya. b. For 2015, includes $4 million of expense relating to a tax indemnification agreement with offsetting income of $4 million recorded in the provision for income taxes. For 2014, includes $7 million of income relating to this tax indemnification agreement with an offsetting expense of $7 million recorded in the provision for income taxes (see Note 9). c. For 2016, includes $11 million of employee severance-related and other costs associated with the execution of IT outsourcing contracts, $6 million of employee severance-related costs associated with the Company’s optimization initiatives in North America and South America and $2 million of costs attributable to the Port Colborne plant sale. For 2015, includes $12 million of charges for impaired assets and restructuring costs in Brazil, $12 million of restructuring costs associated with the Penford acquisition and $4 million of restructuring costs in Canada. For 2014, includes a $33 million write-off of impaired goodwill in the Southern Cone of South America. |
Schedule of net sales to unaffiliated customers by country of origin | Net Sales (in millions) 2016 2015 2014 United States $ $ $ Mexico Brazil Canada Korea Argentina Others Total $ $ $ |
Schedule of long-lived assets (excluding intangible assets) by country | Long-lived Assets (in millions) 2016 2015 2014 United States $ $ $ Mexico Brazil Canada Germany Thailand Korea Argentina Others Total $ $ $ |
Quarterly Financial Data (Una38
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Data (Unaudited) | |
Schedule of quarterly financial data | Summarized quarterly financial data is as follows: (in millions, except per share amounts) 1 st QTR 2 nd QTR 3 rd QTR 4 th QTR* 2016 Net sales before shipping and handling costs $ $ $ $ Less: shipping and handling costs Net sales $ $ $ $ Gross profit Net income attributable to Ingredion Basic earnings per common share of Ingredion $ $ $ $ Diluted earnings per common share of Ingredion $ $ $ $ (in millions, except per share amounts) 1 st QTR 2 nd QTR 3 rd QTR 4 th QTR* 2015 Net sales before shipping and handling costs $ $ $ $ Less: shipping and handling costs Net sales $ $ $ $ Gross profit Net income attributable to Ingredion Basic earnings per common share of Ingredion $ $ $ $ Diluted earnings per common share of Ingredion $ $ $ $ * Fourth quarter 2016 includes a charge of $27 million ($0.36 per diluted common share) associated with an income tax settlement, acquisition and integration costs of $1.4 million ($0.9 million after-tax, or $0.01 per diluted common share) and restructuring costs of $4.0 million ($2.5 million after-tax, or $0.03 per diluted common share) consisting of employee severance-related costs in North America and employee severance-related and other costs associated with the execution of global IT outsourcing contracts. Fourth quarter 2015 includes a charge of $3.8 million ($2.6 million after-tax, or $0.04 per diluted common share) for restructuring costs in Canada, the United States and Brazil, costs of $0.7 million ($0.6 million after-tax, or $0.01 per diluted common share) associated with the acquisition and integration of Penford and Kerr, costs of $1.8 million ($1.1 million after-tax, or $0.02 per diluted common share) relating to the sale of Kerr inventory that was adjusted to fair value at the acquisition date in accordance with business combination accounting rules, costs of $6.8 million ($4.3 million after-tax, or $0.06 per diluted common share) relating to a litigation settlement and a gain of $9.8 million ($8.9 million after-tax, or $0.12 per diluted common share) from the sale of our Port Colborne, Canada plant. |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Investments | ||||
Cost Method Investments | $ 2 | |||
Proceeds from sale of investment | $ 11 | |||
Pre-tax gain on sale of investment | 5 | |||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Goodwill | 784 | $ 601 | 478 | $ 535 |
Intangible Assets, Net (Excluding Goodwill) | 502 | 410 | ||
Foreign currency transaction and translation | ||||
Cumulative translation loss adjustments | 1,000 | 1,000 | ||
Foreign currency transaction losses | 3 | $ 6 | $ 1 | |
BRAZIL | ||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Goodwill | $ 26 | |||
Building | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful life | 25 years | |||
Building | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful life | 50 years | |||
Other Capitalized Property Plant and Equipment | Minimum | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful life | 2 years | |||
Other Capitalized Property Plant and Equipment | Maximum | ||||
Property, Plant and Equipment [Line Items] | ||||
Useful life | 25 years |
Summary of Significant Accoun40
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Carrying amount of goodwill | |||||
Balance at the beginning of the period | $ 601 | $ 478 | $ 535 | ||
Impairment charges | $ 0 | $ 0 | (33) | ||
Currency translation | (3) | (23) | (24) | ||
Acquisitions | 186 | 148 | |||
Disposal | (2) | ||||
Goodwill before impairment charges | 939 | 756 | 939 | 756 | |
Accumulated impairment charges | (155) | (155) | (155) | (155) | |
Balance at the end of the period | 784 | 601 | 784 | 601 | 478 |
North America | |||||
Carrying amount of goodwill | |||||
Balance at the beginning of the period | 424 | 278 | 278 | ||
Acquisitions | 186 | 148 | |||
Disposal | (2) | ||||
Goodwill before impairment charges | 611 | 425 | 611 | 425 | |
Accumulated impairment charges | (1) | (1) | (1) | (1) | |
Balance at the end of the period | 610 | 424 | 610 | 424 | 278 |
South America | |||||
Carrying amount of goodwill | |||||
Balance at the beginning of the period | 22 | 32 | 78 | ||
Impairment charges | (33) | ||||
Currency translation | 4 | (10) | (13) | ||
Goodwill before impairment charges | 59 | 55 | 59 | 55 | |
Accumulated impairment charges | (33) | (33) | (33) | (33) | |
Balance at the end of the period | 26 | 22 | 26 | 22 | 32 |
Asia Pacific | |||||
Carrying amount of goodwill | |||||
Balance at the beginning of the period | 86 | 93 | 97 | ||
Currency translation | (1) | (7) | (4) | ||
Goodwill before impairment charges | 206 | 207 | 206 | 207 | |
Accumulated impairment charges | (121) | (121) | (121) | (121) | |
Balance at the end of the period | 85 | 86 | 85 | 86 | 93 |
EMEA | |||||
Carrying amount of goodwill | |||||
Balance at the beginning of the period | 69 | 75 | 82 | ||
Currency translation | (6) | (6) | (7) | ||
Goodwill before impairment charges | 63 | 69 | 63 | 69 | |
Balance at the end of the period | $ 63 | $ 69 | $ 63 | $ 69 | $ 75 |
Summary of Significant Accoun41
Summary of Significant Accounting Policies (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Identifiable intangible assets | |||
Gross | $ 608 | $ 492 | |
Accumulated Amortization | (106) | (82) | |
Net | $ 502 | $ 410 | |
Weighted Average Useful Life (years) | 17 years | 19 years | |
Amortization expense | $ 25 | $ 22 | $ 14 |
Hedging instruments | |||
Maximum term over which the company hedges exposures to the variability of cash flows for commodity price risk | 24 months | ||
Earnings per common share | |||
Antidilutive securities excluded from computation of earnings per share amount | 0.3 | 0.1 | |
Expected intangible amortization expense for subsequent years | |||
2,017 | $ 30 | ||
2,018 | 29 | ||
2,019 | 29 | ||
2,020 | 27 | ||
2,021 | 18 | ||
Trademarks/tradenames | |||
Identifiable intangible assets | |||
Gross | 143 | $ 144 | |
Net | 143 | 144 | |
Customer relationships | |||
Identifiable intangible assets | |||
Gross | 227 | 235 | |
Accumulated Amortization | (42) | (32) | |
Net | $ 185 | $ 203 | |
Weighted Average Useful Life (years) | 20 years | 25 years | |
Technology | |||
Identifiable intangible assets | |||
Gross | $ 100 | $ 99 | |
Accumulated Amortization | (57) | (45) | |
Net | $ 43 | $ 54 | |
Weighted Average Useful Life (years) | 10 years | 10 years | |
TIC Gums intangible assets (preliminary) | |||
Identifiable intangible assets | |||
Gross | $ 117 | ||
Net | 117 | ||
Other | |||
Identifiable intangible assets | |||
Gross | 21 | $ 14 | |
Accumulated Amortization | (7) | (5) | |
Net | $ 14 | $ 9 | |
Weighted Average Useful Life (years) | 16 years | 8 years |
Summary of Significant Accoun42
Summary of Significant Accounting Policies (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Consolidated Statements of Income | |||||||||||
Provision for income taxes | $ 53 | $ 246 | $ 187 | $ 157 | |||||||
Net income | 133 | 496 | 412 | 363 | |||||||
Net income attributable to Ingredion | $ 94 | $ 143 | $ 117 | $ 130 | $ 104 | $ 108 | $ 107 | $ 84 | $ 485 | $ 402 | $ 355 |
Basic earnings per common share of Ingredion (in dollars per share) | $ 1.29 | $ 1.98 | $ 1.62 | $ 1.81 | $ 1.45 | $ 1.51 | $ 1.49 | $ 1.17 | $ 6.70 | $ 5.62 | $ 4.82 |
Diluted earnings per common share of Ingredion (in dollars per share) | $ 1.26 | $ 1.93 | $ 1.58 | $ 1.77 | $ 1.42 | $ 1.48 | $ 1.47 | $ 1.15 | $ 6.55 | $ 5.51 | $ 4.74 |
Basic (in shares) | 72.3 | 71.6 | 73.6 | ||||||||
Diluted (in shares) | 73.6 | 74.1 | 73 | 74.9 | |||||||
Consolidated Statements of Cash Flows | |||||||||||
Cash provided by operating activities | $ 99 | $ 771 | $ 686 | $ 731 | |||||||
Cash provided by financing activities | 6 | (116) | $ (388) | ||||||||
Consolidated Balance Sheets | |||||||||||
Additional paid-in capital | 1,151 | ||||||||||
Retained earnings | $ 2,899 | 2,650 | $ 2,552 | 2,899 | $ 2,552 | ||||||
Accounting Standards Update 2016.09 Excess Tax Benefit | |||||||||||
Consolidated Statements of Income | |||||||||||
Provision for income taxes | $ (12) | ||||||||||
Increase in diluted weighted average common shares outstanding | 0.4 | ||||||||||
Scenario, Previously Reported | |||||||||||
Consolidated Statements of Income | |||||||||||
Provision for income taxes | 56 | ||||||||||
Net income | 130 | ||||||||||
Net income attributable to Ingredion | $ 127 | ||||||||||
Basic earnings per common share of Ingredion (in dollars per share) | $ 1.77 | ||||||||||
Diluted earnings per common share of Ingredion (in dollars per share) | $ 1.73 | ||||||||||
Diluted (in shares) | 73.3 | ||||||||||
Consolidated Statements of Cash Flows | |||||||||||
Cash provided by operating activities | $ 96 | ||||||||||
Cash provided by financing activities | 9 | ||||||||||
Consolidated Balance Sheets | |||||||||||
Additional paid-in capital | 1,154 | ||||||||||
Retained earnings | $ 2,647 |
Acquisitions By Acquisition (De
Acquisitions By Acquisition (Details) - USD ($) $ in Millions | Dec. 29, 2016 | Aug. 03, 2015 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Business Acquisition [Line Items] | ||||||||||||||
Net sales | $ 1,399 | $ 1,489 | $ 1,455 | $ 1,360 | $ 1,405 | $ 1,437 | $ 1,449 | $ 1,330 | $ 5,704 | $ 5,621 | $ 5,668 | |||
Final purchase price allocation | ||||||||||||||
Goodwill | $ 784 | $ 601 | 784 | 601 | $ 478 | $ 535 | ||||||||
Consideration net of cash | $ 407 | $ 434 | ||||||||||||
TIC Gums | ||||||||||||||
Final purchase price allocation | ||||||||||||||
Working capital (excluding cash) | $ 50 | |||||||||||||
Property, plant and equipment | 42 | |||||||||||||
Identifiable intangible assets | 117 | |||||||||||||
Goodwill | 186 | |||||||||||||
Total purchase price | 395 | |||||||||||||
Consideration net of cash | $ 395 | |||||||||||||
Kerr | ||||||||||||||
Final purchase price allocation | ||||||||||||||
Working capital (excluding cash) | $ 37 | |||||||||||||
Property, plant and equipment | 8 | |||||||||||||
Other assets | 1 | |||||||||||||
Identifiable intangible assets | 29 | |||||||||||||
Goodwill | 27 | |||||||||||||
Total purchase price | 102 | |||||||||||||
Consideration net of cash | $ 102 |
Acquisitions By Major Class (De
Acquisitions By Major Class (Details) - USD ($) $ in Millions | Nov. 29, 2016 | Aug. 03, 2015 | Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Other disclosures | ||||||
Pre-tax acquisition and integration costs | $ 1.4 | $ 3 | $ 10 | $ 2 | ||
Kerr | ||||||
Other disclosures | ||||||
Tangible assets | $ 8 | |||||
Shandong Huanong | ||||||
Other disclosures | ||||||
Cash consideration | $ 12 | |||||
Intangible assets | 7 | |||||
Tangible assets | $ 5 | |||||
2016 Acquisition | ||||||
Other disclosures | ||||||
Pre-tax acquisition and integration costs | $ 3 | |||||
2015 Acquisition | ||||||
Other disclosures | ||||||
Pre-tax acquisition and integration costs | $ 10 | |||||
Fair Value, Inputs, Level 3 | Kerr | Customer relationships | Multi-period excess earnings method | ||||||
Identifiable intangible assets | ||||||
Fair Value | $ 24 | |||||
Estimated Remaining Useful Life | 15 years | |||||
Fair Value, Inputs, Level 3 | Kerr | Trade names | Relief-from-royalty method | ||||||
Identifiable intangible assets | ||||||
Fair Value | $ 4 | |||||
Estimated Remaining Useful Life | 11 years | |||||
Fair Value, Inputs, Level 3 | Kerr | Noncompetition Agreements | Income Approach | ||||||
Identifiable intangible assets | ||||||
Fair Value | $ 1 | |||||
Estimated Remaining Useful Life | 3 years |
Sale of Canadian Plant (Details
Sale of Canadian Plant (Details) - USD ($) $ in Millions | Dec. 15, 2015 | Dec. 31, 2016 | Dec. 31, 2015 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Gain from sale of Canadian plant | $ 10 | ||
Goodwill written-off | 2 | ||
Restructuring charges | $ 19 | ||
Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | Manufacturing assets in Port Colborne, Ontario, Canada | |||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||
Consideration for the sale of assets | $ 35 | ||
Gain from sale of Canadian plant | 10 | ||
Goodwill written-off | $ 2 | ||
Restructuring charges | $ 2 | $ 4 |
Restructuring and Impairment 46
Restructuring and Impairment Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | |
Restructuring and asset impairment charges | |||
Restructuring charges | $ 19 | ||
Penford | |||
Restructuring and asset impairment charges | |||
Restructuring charges | $ 12 | ||
Restructuring accrual | |||
Restructuring charge for employee severance costs | 12 | ||
Employee Severance related costs | |||
Restructuring accrual | |||
Balance in severance accrual at December 31, 2015 | 10 | ||
Payments made to terminated employees | (15) | ||
Balance in severance accrual at December 31, 2016 | 7 | 10 | |
Employee Severance related costs | IT transformation | |||
Restructuring accrual | |||
Restructuring charge for employee severance costs | 6 | ||
Employee Severance related costs | IT transformation | Minimum | |||
Restructuring and asset impairment charges | |||
Expected restructuring charges in 2017 | 1 | ||
Employee Severance related costs | Optimization Initiative Of North And South America | |||
Restructuring accrual | |||
Restructuring charge for employee severance costs | 6 | ||
Employee Severance related costs | Port Colborne Ontario Canada Plant | |||
Restructuring accrual | |||
Restructuring charge for employee severance costs | 2 | ||
Employee Severance And Other Costs | IT transformation | |||
Restructuring and asset impairment charges | |||
Restructuring charges | 11 | ||
Facility Closing | Port Colborne Ontario Canada Plant | |||
Restructuring and asset impairment charges | |||
Restructuring charges | 4 | ||
Facility Closing | Plant Closing In Trombudo Central And Conchal | |||
Restructuring and asset impairment charges | |||
Restructuring charges | 12 | ||
Charges for impaired assets | 10 | ||
Restructuring accrual | |||
Restructuring charge for employee severance costs | $ 2 | ||
Facility Closing | Port Colborne Ontario Canada Plant | |||
Restructuring and asset impairment charges | |||
Restructuring charges | $ 2 | ||
Southern Cone of South America | |||
Restructuring and asset impairment charges | |||
Charges for impaired assets | $ 33 |
Financial Instruments, Deriva47
Financial Instruments, Derivatives and Hedging Activities (Details) - USD ($) $ in Millions | Sep. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Financial instruments, derivatives and hedging activities | |||||
Accumulated gains (losses) from derivative instruments, net of tax effect | $ 1,071 | $ 1,102 | $ 782 | $ 583 | |
Carrying amount of fair value adjustment related to hedged fixed rate instrument debt instrument | $ 3 | 7 | |||
Senior Notes 4.625 Percent Due November 1, 2020 | |||||
Financial instruments, derivatives and hedging activities | |||||
Debt, face amount | $ 400 | ||||
Commodity Contract | Minimum | |||||
Financial instruments, derivatives and hedging activities | |||||
Maturity period of price risk derivative | 12 months | ||||
Commodity Contract | Maximum | |||||
Financial instruments, derivatives and hedging activities | |||||
Maturity period of price risk derivative | 24 months | ||||
Treasury Lock | |||||
Foreign currency hedging | |||||
Derivative notional amount | $ 0 | 0 | |||
Cash Flow Hedging | Commodity Contract | |||||
Financial instruments, derivatives and hedging activities | |||||
Accumulated gains (losses) from derivative instruments, net of tax effect | 21 | ||||
Accumulated gains (losses) from derivative instruments, net income tax effect | 10 | ||||
Cash Flow Hedging | Treasury Lock | |||||
Financial instruments, derivatives and hedging activities | |||||
Accumulated gains (losses) from derivative instruments, net of tax effect | 4 | 5 | |||
Accumulated gains (losses) from derivative instruments, net income tax effect | 2 | 2 | |||
Fair Value Hedging | Interest Rate Swap | |||||
Financial instruments, derivatives and hedging activities | |||||
Debt, floating rate of interest basis | six-month US dollar LIBOR | ||||
Fair Value Hedging | Interest Rate Swap | Other Assets | |||||
Financial instruments, derivatives and hedging activities | |||||
Interest rate swap fair value hedge asset | 3 | 7 | |||
Fair Value Hedging | Interest Rate Swap | Long Term Debt Balance Sheet Location | |||||
Financial instruments, derivatives and hedging activities | |||||
Interest rate swap fair value hedge liabilities | 3 | 7 | |||
Fair Value Hedging | Interest Rate Swap | Senior Notes 6.0 Percent Due April 15, 2017 | |||||
Financial instruments, derivatives and hedging activities | |||||
Debt, fixed interest rate (as a percent) | 6.00% | ||||
Debt, face amount | $ 200 | ||||
Fair Value Hedging | Interest Rate Swap | Senior Notes 1.8 Percent Due September 25, 2017 | |||||
Financial instruments, derivatives and hedging activities | |||||
Debt, fixed interest rate (as a percent) | 1.80% | ||||
Debt, face amount | $ 300 | ||||
Fair Value Hedging | Interest Rate Swap | Senior Notes 4.625 Percent Due November 1, 2020 | |||||
Financial instruments, derivatives and hedging activities | |||||
Debt, fixed interest rate (as a percent) | 4.625% | ||||
Debt, face amount | $ 200 | ||||
Fair Value Hedging | Foreign Exchange Forward | |||||
Financial instruments, derivatives and hedging activities | |||||
Fair value of assets | 5 | 10 | |||
Fair Value Hedging | Foreign Exchange Forward | Short | |||||
Foreign currency hedging | |||||
Derivative notional amount | 432 | 606 | |||
Fair Value Hedging | Foreign Exchange Forward | Long | |||||
Foreign currency hedging | |||||
Derivative notional amount | $ 227 | $ 287 |
Financial Instruments, Deriva48
Financial Instruments, Derivatives and Hedging Activities Balance Sheet Location (Details) lb in Millions, gal in Millions, bu in Millions, MMBTU in Millions, $ in Millions | Dec. 31, 2016USD ($)MMBTUlbgalbu | Dec. 31, 2015USD ($) |
Corn Commodity | ||
Fair value of commodity contracts | ||
Futures contract (in bushels for corn and gallons for ethanol) | bu | 122 | |
Soy Bean Oil | ||
Fair value of commodity contracts | ||
Soybean oil futures contract (in pounds) | lb | 41 | |
Natural Gas Commodity | ||
Fair value of commodity contracts | ||
Natural gas futures contract (in mmbtu) | MMBTU | 20 | |
Ethanol Commodity | ||
Fair value of commodity contracts | ||
Futures contract (in bushels for corn and gallons for ethanol) | gal | 10 | |
Designated as Hedging Instrument | ||
Fair value of commodity contracts | ||
Fair value of assets | $ 39 | $ 32 |
Fair value of liabilities | 27 | 42 |
Designated as Hedging Instrument | Commodity and Foreign Currency Contracts | Accounts Receivable, Net | ||
Fair value of commodity contracts | ||
Fair value of assets | 31 | 18 |
Designated as Hedging Instrument | Commodity and Foreign Currency Contracts | Accounts Payable [Member] | ||
Fair value of commodity contracts | ||
Fair value of liabilities | 25 | 38 |
Designated as Hedging Instrument | Commodity, foreign currency, and interest rate contracts | Other Assets | ||
Fair value of commodity contracts | ||
Fair value of assets | 8 | 14 |
Designated as Hedging Instrument | Commodity, foreign currency, and interest rate contracts | Non Current Liabilities | ||
Fair value of commodity contracts | ||
Fair value of liabilities | $ 2 | $ 4 |
Financial Instruments, Deriva49
Financial Instruments, Derivatives and Hedging Activities Contracts (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Gains or losses on derivatives | |||
Amount of Gains (Losses) Recognized in OCI on Derivatives | $ (17) | $ (61) | $ (41) |
Amount of Gains (Losses) Reclassified from AOCI into Income | (49) | (46) | (73) |
Gross Profit | |||
Gains or losses on derivatives | |||
Amount of Gains (Losses) Reclassified from AOCI into Income | (47) | (43) | (70) |
Financing Costs [Member] | |||
Gains or losses on derivatives | |||
Amount of Gains (Losses) Reclassified from AOCI into Income | (2) | (3) | (3) |
Commodity and Foreign Currency Contracts | |||
Gains or losses on derivatives | |||
Amount of Gains (Losses) Recognized in OCI on Derivatives | (17) | $ (61) | $ (41) |
Cash Flow Hedging | Commodity Contract | |||
Gains or losses on derivatives | |||
Losses expected to be reclassified into earnings during the next 12 months on commodity hedging contracts, net of tax | 1 | ||
Cash Flow Hedging | Treasury Lock | |||
Gains or losses on derivatives | |||
Losses expected to be reclassified into earnings during next twelve months on settled Treasury Lock Agreements, net of tax | 1 | ||
Cash Flow Hedging | Foreign Exchange Forward | |||
Gains or losses on derivatives | |||
Losses related to foreign currency hedges expected to be reclassified into earnings during the next twelve months, net of tax | $ 1 |
Financial Instruments, Deriva50
Financial Instruments, Derivatives and Hedging Activities Recurring And Nonrecurring (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Fair value of assets and liabilities | ||
Long-term debt | $ 1,929 | $ 1,912 |
Estimate of Fair Value Measurement | ||
Fair value of assets and liabilities | ||
Available for sale securities | 7 | 6 |
Derivative assets | 39 | 32 |
Derivative liabilities | 27 | 42 |
Long-term debt | 1,929 | 1,912 |
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 | ||
Fair value of assets and liabilities | ||
Available for sale securities | 7 | 6 |
Derivative assets | 6 | 2 |
Derivative liabilities | 11 | 21 |
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2 | ||
Fair value of assets and liabilities | ||
Derivative assets | 33 | 30 |
Derivative liabilities | 16 | 21 |
Long-term debt | $ 1,929 | $ 1,912 |
Financial Instruments, Deriva51
Financial Instruments, Derivatives and Hedging Activities Debt Instruments (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Sep. 22, 2016 | Dec. 31, 2015 |
Long-term debt | |||
Carrying amount | $ 1,850 | $ 1,819 | |
Long-term debt | 1,929 | 1,912 | |
Carrying amount of fair value adjustment related to hedged fixed rate instrument debt instrument | $ 3 | 7 | |
Senior Notes 3.20 Percent Due October 1, 2026 | |||
Long-term debt | |||
Debt, interest rate (as a percent) | 3.20% | 3.20% | |
Carrying amount | $ 496 | ||
Long-term debt | $ 482 | ||
Senior Notes 4.625 Percent Due November 1, 2020 | |||
Long-term debt | |||
Debt, interest rate (as a percent) | 4.625% | ||
Carrying amount | $ 398 | 398 | |
Long-term debt | $ 428 | 420 | |
Senior Notes 1.8 Percent Due September 25, 2017 | |||
Long-term debt | |||
Debt, interest rate (as a percent) | 1.80% | ||
Carrying amount | $ 299 | 299 | |
Long-term debt | $ 301 | 300 | |
Senior Notes 6.625 Percent Due 2037 | |||
Long-term debt | |||
Debt, interest rate (as a percent) | 6.625% | ||
Carrying amount | $ 254 | 254 | |
Long-term debt | $ 299 | 302 | |
Senior Notes 6.0 Percent Due April 15, 2017 | |||
Long-term debt | |||
Debt, interest rate (as a percent) | 6.00% | ||
Carrying amount | $ 200 | 200 | |
Long-term debt | $ 202 | 211 | |
Senior Notes 5.62 Percent Due March 25, 2020 | |||
Long-term debt | |||
Debt, interest rate (as a percent) | 5.62% | ||
Carrying amount | $ 200 | 200 | |
Long-term debt | $ 217 | 218 | |
US Revolving Credit Facility Replaced October 2016 | |||
Long-term debt | |||
Carrying amount | 111 | ||
Long-term debt | 111 | ||
Term loan repaid September 2016 | |||
Long-term debt | |||
Carrying amount | 350 | ||
Long-term debt | $ 350 |
Financing Arrangements (Details
Financing Arrangements (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Short-term borrowings | ||
Short-term borrowings in various currencies (at rates ranging from 1% to 7% for 2016 and 2% to 6% for 2015) | $ 106 | $ 19 |
Debt outstanding | $ 1,960 | $ 1,840 |
Maximum | ||
Short-term borrowings | ||
Short-term borrowings in various currencies, interest rate (as a percent) | 7.00% | 6.00% |
Minimum | ||
Short-term borrowings | ||
Short-term borrowings in various currencies, interest rate (as a percent) | 1.00% | 2.00% |
Financing Arrangements (Detai53
Financing Arrangements (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Domestic Line of Credit | |
Long-term debt | |
Additional increase in borrowing capacity of the line of credit available at the entity's option | $ 500 |
Debt, floating rate of interest basis | LIBOR |
Foreign Line of Credit | |
Long-term debt | |
Unused operating lines of credit | $ 443 |
Financing Arrangements (Detai54
Financing Arrangements (Details) - USD ($) | Oct. 11, 2016 | Sep. 22, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2014 |
Debt Instrument [Line Items] | |||||
Long-term Debt, Total | $ 1,850,000,000 | $ 1,819,000,000 | |||
Long-term debt | 1,850,000,000 | 1,819,000,000 | |||
Line of credit facility, maximum borrowing capacity | $ 1,000,000,000 | ||||
Debt issuance costs | $ 8,000,000 | 5,000,000 | |||
Senior Notes 3.20 Percent Due October 1, 2026 | |||||
Debt Instrument [Line Items] | |||||
Debt, interest rate (as a percent) | 3.20% | 3.20% | |||
Aggregate principal Amount | $ 500,000,000 | ||||
Long-term Debt, Total | $ 496,000,000 | ||||
Net proceeds from sale of the notes | 497,000,000 | ||||
Term loan repaid September 2016 | |||||
Debt Instrument [Line Items] | |||||
Long-term Debt, Total | 350,000,000 | ||||
Repayments of Long-term Debt | 350,000,000 | ||||
Senior Notes 5.62 Percent Due March 25, 2020 | |||||
Debt Instrument [Line Items] | |||||
Debt, interest rate (as a percent) | 5.62% | ||||
Long-term Debt, Total | $ 200,000,000 | 200,000,000 | |||
Senior Notes 4.625 Percent Due November 1, 2020 | |||||
Debt Instrument [Line Items] | |||||
Debt, interest rate (as a percent) | 4.625% | ||||
Aggregate principal Amount | $ 400,000,000 | ||||
Long-term Debt, Total | $ 398,000,000 | 398,000,000 | |||
Senior Notes 6.625 Percent Due 2037 | |||||
Debt Instrument [Line Items] | |||||
Debt, interest rate (as a percent) | 6.625% | ||||
Long-term Debt, Total | $ 254,000,000 | 254,000,000 | |||
Senior Notes 1.8 Percent Due September 25, 2017 | |||||
Debt Instrument [Line Items] | |||||
Debt, interest rate (as a percent) | 1.80% | ||||
Aggregate principal Amount | $ 300,000,000 | ||||
Long-term Debt, Total | $ 299,000,000 | 299,000,000 | |||
Senior Notes 6.0 Percent Due April 15, 2017 | |||||
Debt Instrument [Line Items] | |||||
Debt, interest rate (as a percent) | 6.00% | ||||
Aggregate principal Amount | $ 200,000,000 | ||||
Long-term Debt, Total | 200,000,000 | 200,000,000 | |||
Revolving Credit Agreement | |||||
Debt Instrument [Line Items] | |||||
Payment of borrowings under revolving credit facility | $ 52,000,000 | ||||
Borrowings outstanding | $ 0 | ||||
Line of credit facility, maximum borrowing capacity | $ 1,000,000,000 | ||||
Debt Instrument, Term | 5 years | ||||
U.S. revolving credit facility replaced October 2016 | |||||
Debt Instrument [Line Items] | |||||
Long-term Debt, Total | $ 111,000,000 |
Financing Arrangements (Detai55
Financing Arrangements (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Long-term debt | ||
Fair value adjustment related to hedged fixed rate debt | $ 3 | $ 7 |
Long-term debt | 1,850 | 1,819 |
Long-term debt maturities | ||
2,017 | 500 | |
2,020 | 600 | |
2,026 | 500 | |
2,037 | 250 | |
Guaranteed obligations of consolidated subsidiaries | $ 121 | $ 204 |
Leases (Details)
Leases (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Leases | |||
Rental expense | $ 53 | $ 52 | $ 47 |
Minimum lease payments due on leases | |||
2,017 | 45 | ||
2,018 | 41 | ||
2,019 | 36 | ||
2,020 | 28 | ||
2,021 | 23 | ||
Balance thereafter | $ 50 |
Income Taxes - Provision for in
Income Taxes - Provision for income taxes (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income before income taxes: | ||||
United States | $ 176 | $ 109 | $ 83 | |
Foreign | 566 | 490 | 437 | |
Income before income taxes | 742 | 599 | 520 | |
Current tax expense | ||||
US federal | 95 | 26 | 8 | |
State and local | 8 | 3 | 1 | |
Foreign | 148 | 164 | 159 | |
Total current | 251 | 193 | 168 | |
Deferred tax expense (benefit) | ||||
US federal | 13 | (8) | (16) | |
State and local | 1 | (1) | (2) | |
Foreign | (19) | 3 | 7 | |
Total deferred | (5) | (6) | (11) | |
Total provision for income taxes | $ 53 | 246 | 187 | $ 157 |
Deferred tax assets attributable to: | ||||
Employee benefit accruals | 39 | 34 | ||
Pension and postretirement plans | 30 | 30 | ||
Derivative contracts | 3 | 14 | ||
Net operating loss carryforwards | 18 | 13 | ||
Foreign tax credit carryforwards | 4 | 3 | ||
Other | 24 | 38 | ||
Gross deferred tax assets | 118 | 132 | ||
Valuation allowance | (21) | (12) | ||
Net deferred tax assets | 97 | 120 | ||
Deferred tax liabilities attributable to: | ||||
Property, plant and equipment | 206 | 193 | ||
Identified intangibles | 55 | 59 | ||
Gross deferred tax liabilities | 261 | 252 | ||
Net deferred tax liabilities | 164 | $ 132 | ||
Valuation allowance on foreign subsidiaries net deferred tax assets | 2 | |||
State and Local Jurisdiction | ||||
Deferred tax assets attributable to: | ||||
Net operating loss carryforwards | 8 | |||
Deferred tax liabilities attributable to: | ||||
Loss carryforwards, valuation allowance | 8 | |||
Credit carryforwards, valuation allowance | 2 | |||
Foreign Tax Authority | ||||
Deferred tax liabilities attributable to: | ||||
Loss carryforwards, valuation allowance | $ 9 |
Income Taxes - Effective tax ra
Income Taxes - Effective tax rate (Details) - USD ($) | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2016 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of the US federal statutory tax rate to the Company's effective tax rate | ||||||
Provision for tax at statutory rate (as a percent) | 35.00% | 35.00% | 35.00% | |||
Tax rate difference on foreign income (as a percent) | (5.51%) | (5.75%) | (6.26%) | |||
State and local taxes - net (as a percent) | 0.33% | 0.28% | 0.13% | |||
Nondeductible goodwill impairment - Southern Cone | 2.18% | |||||
Tax impact of fluctuations in Mexican Pesos to US Dollar | 2.40% | 2.87% | 1.30% | |||
Net tax impact of US foreign tax credits | (2.33%) | 0.93% | (0.31%) | |||
Net tax impact of US / Canada settlement | 3.17% | |||||
Other items - net (as a percent) | 0.06% | (2.11%) | (1.85%) | |||
Provision at effective tax rate (as a percent) | 33.12% | 31.22% | 30.19% | |||
Tax impact of change in Mexican Pesos to US Dollars | $ 18,000,000 | $ 17,000,000 | ||||
Pre-tax gain on foreign currency exchange amounts | 0 | 0 | ||||
Net tax impact of US / Canada settlement | 24,000,000 | |||||
Provision for (reversal of) income taxes | $ 53,000,000 | 246,000,000 | 187,000,000 | $ 157,000,000 | ||
Income tax provision (benefit) that offset income tax indemnification income | 4,000,000 | 7,000,000 | ||||
Undistributed earnings on foreign subsidiaries tax provision | 0 | |||||
Undistributed earnings of foreign subsidiaries | 2,700,000,000 | |||||
Reconciliation of beginning and ending amount of unrecognized tax benefits excluding interest and penalties | ||||||
Balance at January 1 | $ 12,000,000 | 12,000,000 | 23,000,000 | |||
Additions for tax positions related to prior years | 72,000,000 | |||||
Reductions for tax positions related to prior years | (9,000,000) | (10,000,000) | ||||
Additions based on tax positions related to the current year | 12,000,000 | 1,000,000 | ||||
Reductions related to a lapse in the statute of limitations | (1,000,000) | (2,000,000) | ||||
Balance at December 31 | 86,000,000 | 12,000,000 | $ 23,000,000 | |||
Unrecognized tax benefit that, if recognized, could affect the effective tax rate in future periods | 29,000,000 | |||||
Remaining unrecognized tax benefits | 57,000,000 | |||||
Unrecognized tax benefit, income tax receivable | 52,000,000 | |||||
Unrecognized tax foreign benefit that would be created as part of Canada and US process | 4,000,000 | |||||
Interest expense accrued, net of interest income | 9,000,000 | $ 4,000,000 | ||||
Unrecognized tax benefits, current | 72,000,000 | |||||
Unrecognized tax benefit current that, if recognized could affect the effective tax rate in future periods | $ 26,000,000 | |||||
MEXICO | ||||||
Reconciliation of the US federal statutory tax rate to the Company's effective tax rate | ||||||
Provision for tax at statutory rate (as a percent) | 30.00% | |||||
CANADA | ||||||
Reconciliation of the US federal statutory tax rate to the Company's effective tax rate | ||||||
Provision for tax at statutory rate (as a percent) | 25.00% | |||||
PAKISTAN | ||||||
Reconciliation of the US federal statutory tax rate to the Company's effective tax rate | ||||||
Provision for tax at statutory rate (as a percent) | 31.00% | |||||
BRAZIL | ||||||
Reconciliation of the US federal statutory tax rate to the Company's effective tax rate | ||||||
Provision for tax at statutory rate (as a percent) | 34.00% | |||||
2014-2016 | ||||||
Reconciliation of the US federal statutory tax rate to the Company's effective tax rate | ||||||
Net tax impact of US / Canada settlement | 0.97% | |||||
Net tax impact of US / Canada settlement | $ 7,000,000 | |||||
2,016 | ||||||
Reconciliation of the US federal statutory tax rate to the Company's effective tax rate | ||||||
Net tax impact of US / Canada settlement | $ 4,000,000 | |||||
Akzo Nobel NV | ||||||
Reconciliation of the US federal statutory tax rate to the Company's effective tax rate | ||||||
Income tax provision (benefit) that offset income tax indemnification income | $ (4,000,000) | $ 7,000,000 | ||||
Pre-acquisition audit result adjustment, tax | (3,000,000) | 5,000,000 | ||||
Pre-acquisition audit result adjustment, interest | $ (1,000,000) | $ 2,000,000 | ||||
Pre-acquisition audit result adjustment (as a percent) | 0.70% | 1.30% |
Benefit Plans - Detail (Details
Benefit Plans - Detail (Details) $ in Millions | 1 Months Ended | 2 Months Ended | 3 Months Ended | 12 Months Ended | ||
Apr. 30, 2016USD ($)item | Feb. 22, 2017USD ($) | Mar. 31, 2015USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Pension Plan, Defined Benefit | ||||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||||||
Balance at the beginning of the period | $ 555 | $ 541 | ||||
Balance at the end of the period | 555 | $ 541 | ||||
United States Pension Plan of US Entity, Defined Benefit | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Reduction of benefit obligation | (5) | |||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||||||
Balance at the beginning of the period | 367 | $ 314 | 359 | 314 | ||
Service cost | 6 | 8 | $ 7 | |||
Interest cost | 14 | 14 | 13 | |||
Benefits paid | (16) | (15) | ||||
Actuarial loss (gain) | 10 | (26) | ||||
Business Combinations/Transfers | 73 | |||||
Curtailment / settlement / amendments | (6) | (9) | ||||
Defined Benefit Plan, Benefit Obligation, Ending Balance | 367 | 359 | 314 | |||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||||
Balance at the beginning of the period | $ 368 | 313 | 354 | 313 | ||
Actual return on plan assets | 20 | (2) | ||||
Cash contributions to defined benefit pension plan | 10 | 11 | ||||
Benefits paid | (16) | (15) | ||||
Plan settlements | (9) | |||||
Business Combinations/Transfers | 56 | |||||
Balance at the end of the period | 368 | 354 | 313 | |||
Funded status | 1 | (5) | ||||
Defined Benefit Plan, Amounts Recognized in Balance Sheet [Abstract] | ||||||
Non-current asset | 12 | 18 | ||||
Current liabilities | (1) | (1) | ||||
Non-current liabilities | (10) | (22) | ||||
Net asset (liability) recognized | 1 | (5) | ||||
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), before Tax [Abstract] | ||||||
Net actuarial loss | 28 | 19 | ||||
Prior service cost | (6) | (2) | ||||
Net amount recognized | 22 | 17 | ||||
Defined Benefit Plan, Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets [Abstract] | ||||||
Projected benefit obligation | 11 | 164 | ||||
Accumulated benefit obligation | 10 | 158 | ||||
Fair value of plan assets | 141 | |||||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ||||||
Service cost | 6 | 8 | 7 | |||
Interest cost | 14 | 14 | 13 | |||
Expected return on plan assets | (20) | (24) | (21) | |||
Amortization of actuarial loss | 1 | 1 | $ 1 | |||
Settlement loss (gain) | (1) | |||||
Net postretirement benefit cost / Net pension cost (credit) | 1 | (2) | ||||
Amount related to the amortization of the entity's accumulated actuarial loss included in accumulated other comprehensive loss that will be recognized in net pension expense in next fiscal year | 1 | |||||
Defined Benefit Plan, Amounts Recognized in Other Comprehensive Income (Loss) [Abstract] | ||||||
Net actuarial loss (gain) | 10 | |||||
Amortization of prior service credit | (6) | |||||
Amortization of actuarial loss | (1) | |||||
Total recorded in other comprehensive income | 3 | |||||
Net postretirement benefit cost / Net pension cost (credit) | 1 | $ (2) | ||||
Total recorded in other comprehensive income and net periodic benefit cost | $ 4 | |||||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | ||||||
Discount rate (as a percent) | 4.30% | 4.54% | ||||
Rate of compensation increase (as a percent) | 4.54% | 4.71% | ||||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | ||||||
Discount rate (as a percent) | 4.30% | 4.00% | 4.60% | |||
Expected long-term return on plan assets (as a percent) | 5.75% | 5.75% | 7.00% | 7.25% | ||
Rate of compensation increase (as a percent) | 4.71% | 4.31% | 4.22% | |||
United States Pension Plan of US Entity, Defined Benefit | Minimum | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Percent of base salary, bonus and overtime credited to participating employees' accounts by the Company | 3.00% | |||||
United States Pension Plan of US Entity, Defined Benefit | Maximum | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Percent of base salary, bonus and overtime credited to participating employees' accounts by the Company | 10.00% | |||||
Foreign Pension Plan, Defined Benefit | ||||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | ||||||
Balance at the beginning of the period | $ 223 | 267 | $ 219 | $ 267 | ||
Service cost | 3 | 4 | $ 6 | |||
Interest cost | 10 | 12 | 14 | |||
Benefits paid | (15) | (11) | ||||
Actuarial loss (gain) | 6 | (4) | ||||
Curtailment / settlement / amendments | (5) | (11) | ||||
Foreign currency translation | 5 | (38) | ||||
Defined Benefit Plan, Benefit Obligation, Ending Balance | 223 | 219 | 267 | |||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | ||||||
Balance at the beginning of the period | $ 211 | $ 232 | 206 | 232 | ||
Actual return on plan assets | 11 | 16 | ||||
Cash contributions to defined benefit pension plan | 7 | 5 | ||||
Benefits paid | (15) | (11) | ||||
Plan settlements | (5) | |||||
Foreign currency translation | 7 | (36) | ||||
Balance at the end of the period | 211 | 206 | 232 | |||
Funded status | (12) | (13) | ||||
Defined Benefit Plan, Amounts Recognized in Balance Sheet [Abstract] | ||||||
Non-current asset | 29 | 32 | ||||
Current liabilities | (1) | (3) | ||||
Non-current liabilities | (40) | (42) | ||||
Net asset (liability) recognized | (12) | (13) | ||||
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), before Tax [Abstract] | ||||||
Net actuarial loss | 52 | 48 | ||||
Transition obligation | 1 | 2 | ||||
Prior service cost | (1) | (1) | ||||
Net amount recognized | 52 | 49 | ||||
Defined Benefit Plan, Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets [Abstract] | ||||||
Projected benefit obligation | 43 | 47 | ||||
Accumulated benefit obligation | 36 | 38 | ||||
Fair value of plan assets | 2 | 2 | ||||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ||||||
Service cost | 3 | 4 | 6 | |||
Interest cost | 10 | 12 | 14 | |||
Expected return on plan assets | (10) | (13) | (14) | |||
Amortization of actuarial loss | 2 | 3 | 3 | |||
Settlement loss (gain) | 1 | |||||
Net postretirement benefit cost / Net pension cost (credit) | 6 | 6 | 9 | |||
Amount related to the amortization of the entity's accumulated actuarial loss included in accumulated other comprehensive loss that will be recognized in net pension expense in next fiscal year | (2) | |||||
Defined Benefit Plan, Amounts Recognized in Other Comprehensive Income (Loss) [Abstract] | ||||||
Net actuarial loss (gain) | 6 | |||||
Amortization of prior service credit | (1) | |||||
Amortization of actuarial loss | (2) | |||||
Total recorded in other comprehensive income | 3 | |||||
Net postretirement benefit cost / Net pension cost (credit) | 6 | $ 6 | $ 9 | |||
Total recorded in other comprehensive income and net periodic benefit cost | $ 9 | |||||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | ||||||
Discount rate (as a percent) | 4.34% | 4.57% | ||||
Rate of compensation increase (as a percent) | 3.62% | 3.73% | ||||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | ||||||
Discount rate (as a percent) | 4.57% | 4.47% | 5.60% | |||
Expected long-term return on plan assets (as a percent) | 5.41% | 6.48% | 6.82% | |||
Rate of compensation increase (as a percent) | 3.73% | 3.76% | 4.39% | |||
Canadian Plans | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Number of plans amended | item | 1 | 1 | ||||
Curtailment gain | $ (9) | |||||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | ||||||
Settlement loss (gain) | $ 1 | |||||
Settlement/curtailment | $ 5 | |||||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | ||||||
Expected long-term return on plan assets (as a percent) | 4.76% | 5.00% | ||||
United States Postretirement Benefit Plan of US Entity, Defined Benefit | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Age of employees upon attaining which they can avail benefits accrued during their employment | 65 years | |||||
Term of treasury notes used to calculate interest on accrued benefits | 5 years |
Benefit Plans - Future Benefit
Benefit Plans - Future Benefit Payments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Amounts charged to expense | |||
Amounts charged to expense for defined contribution plans | $ 20 | $ 17 | $ 17 |
United States Pension Plan of US Entity, Defined Benefit | |||
Plan assets | |||
Weighted average asset allocation (as a percent) | 100.00% | 100.00% | |
Fair value of plan assets | $ 368 | $ 354 | 313 |
Expected contribution in next fiscal year | 1 | ||
Expected future benefit payments | |||
2,017 | 19 | ||
2,018 | 19 | ||
2,019 | 20 | ||
2,020 | 22 | ||
2,021 | 23 | ||
Years 2022 - 2026 | 123 | ||
United States Pension Plan of US Entity, Defined Benefit | US Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 70 | ||
United States Pension Plan of US Entity, Defined Benefit | International Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 68 | ||
United States Pension Plan of US Entity, Defined Benefit | Long Duration Fixed Income Index Bonds | |||
Plan assets | |||
Fair value of plan assets | $ 227 | ||
United States Pension Plan of US Entity, Defined Benefit | Cash, Cash Equivalents and Other [Member] | |||
Plan assets | |||
Plan assets minimum allocation percentage | 1.00% | ||
Plan assets maximum allocation percentage | 3.00% | ||
Weighted average asset allocation (as a percent) | 1.00% | 1.00% | |
Fair value of plan assets | $ 3 | ||
United States Pension Plan of US Entity, Defined Benefit | Equity Securities | |||
Plan assets | |||
Plan assets minimum allocation percentage | 20.00% | ||
Plan assets maximum allocation percentage | 40.00% | ||
Weighted average asset allocation (as a percent) | 38.00% | 62.00% | |
United States Pension Plan of US Entity, Defined Benefit | Debt Securities | |||
Plan assets | |||
Weighted average asset allocation (as a percent) | 61.00% | 37.00% | |
United States Pension Plan of US Entity, Defined Benefit | Fixed Income Securities | |||
Plan assets | |||
Plan assets minimum allocation percentage | 57.00% | ||
Plan assets maximum allocation percentage | 79.00% | ||
United States Pension Plan of US Entity, Defined Benefit | Fair Value, Inputs, Level 2 | |||
Plan assets | |||
Fair value of plan assets | $ 368 | ||
United States Pension Plan of US Entity, Defined Benefit | Fair Value, Inputs, Level 2 | US Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 70 | ||
United States Pension Plan of US Entity, Defined Benefit | Fair Value, Inputs, Level 2 | International Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 68 | ||
United States Pension Plan of US Entity, Defined Benefit | Fair Value, Inputs, Level 2 | Long Duration Fixed Income Index Bonds | |||
Plan assets | |||
Fair value of plan assets | 227 | ||
United States Pension Plan of US Entity, Defined Benefit | Fair Value, Inputs, Level 2 | Cash, Cash Equivalents and Other [Member] | |||
Plan assets | |||
Fair value of plan assets | $ 3 | ||
Foreign Pension Plan, Defined Benefit | |||
Plan assets | |||
Weighted average asset allocation (as a percent) | 100.00% | 100.00% | |
Fair value of plan assets | $ 211 | $ 206 | $ 232 |
Expected contribution in next fiscal year | 2 | ||
Expected future benefit payments | |||
2,017 | 9 | ||
2,018 | 10 | ||
2,019 | 10 | ||
2,020 | 11 | ||
2,021 | 11 | ||
Years 2022 - 2026 | 64 | ||
Foreign Pension Plan, Defined Benefit | US Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 11 | ||
Foreign Pension Plan, Defined Benefit | Canada Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 21 | ||
Foreign Pension Plan, Defined Benefit | International Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 49 | ||
Foreign Pension Plan, Defined Benefit | Real Estate Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 5 | ||
Foreign Pension Plan, Defined Benefit | Intermediate Fixed Income Index Funds | |||
Plan assets | |||
Fair value of plan assets | 21 | ||
Foreign Pension Plan, Defined Benefit | Long Duration Canada Fixed Income Index Bonds | |||
Plan assets | |||
Fair value of plan assets | $ 72 | ||
Foreign Pension Plan, Defined Benefit | Cash, Cash Equivalents and Other [Member] | |||
Plan assets | |||
Weighted average asset allocation (as a percent) | 15.00% | 13.00% | |
Amounts charged to expense | |||
Fixed income securities maturity (in years) | 10 years | ||
Foreign Pension Plan, Defined Benefit | Cash and Cash Equivalents | |||
Plan assets | |||
Fair value of plan assets | $ 9 | ||
Foreign Pension Plan, Defined Benefit | Equity Securities | |||
Plan assets | |||
Weighted average asset allocation (as a percent) | 41.00% | 49.00% | |
Foreign Pension Plan, Defined Benefit | Debt Securities | |||
Plan assets | |||
Weighted average asset allocation (as a percent) | 44.00% | 38.00% | |
Foreign Pension Plan, Defined Benefit | Other Plan Assets | |||
Plan assets | |||
Fair value of plan assets | $ 23 | ||
Foreign Pension Plan, Defined Benefit | Fair Value, Inputs, Level 1 | |||
Plan assets | |||
Fair value of plan assets | 1 | ||
Foreign Pension Plan, Defined Benefit | Fair Value, Inputs, Level 1 | Cash and Cash Equivalents | |||
Plan assets | |||
Fair value of plan assets | 1 | ||
Foreign Pension Plan, Defined Benefit | Fair Value, Inputs, Level 2 | |||
Plan assets | |||
Fair value of plan assets | 210 | ||
Foreign Pension Plan, Defined Benefit | Fair Value, Inputs, Level 2 | US Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 11 | ||
Foreign Pension Plan, Defined Benefit | Fair Value, Inputs, Level 2 | Canada Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 21 | ||
Foreign Pension Plan, Defined Benefit | Fair Value, Inputs, Level 2 | International Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 49 | ||
Foreign Pension Plan, Defined Benefit | Fair Value, Inputs, Level 2 | Real Estate Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 5 | ||
Foreign Pension Plan, Defined Benefit | Fair Value, Inputs, Level 2 | Intermediate Fixed Income Index Funds | |||
Plan assets | |||
Fair value of plan assets | 21 | ||
Foreign Pension Plan, Defined Benefit | Fair Value, Inputs, Level 2 | Long Duration Canada Fixed Income Index Bonds | |||
Plan assets | |||
Fair value of plan assets | 72 | ||
Foreign Pension Plan, Defined Benefit | Fair Value, Inputs, Level 2 | Cash and Cash Equivalents | |||
Plan assets | |||
Fair value of plan assets | 8 | ||
Foreign Pension Plan, Defined Benefit | Fair Value, Inputs, Level 2 | Other Plan Assets | |||
Plan assets | |||
Fair value of plan assets | $ 23 |
Benefit Plans (Details)
Benefit Plans (Details) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | |
Multiemployer Plans | |||||
Multiemployer benefit plan that company contributes to | item | 1 | ||||
Multiemployer Plan contributions | $ 14 | $ 12 | $ 12 | ||
Other Postretirement Benefit Plan, Defined Benefit | |||||
Benefit obligation | |||||
Balance at the beginning of the period | 64 | 47 | |||
Service cost | 1 | 1 | 3 | ||
Interest cost | 2 | 3 | 4 | ||
Plan amendment | $ 1 | ||||
Actuarial loss (gain) | 2 | (1) | |||
Business Combinations/Transfers | 21 | ||||
Benefits paid | (4) | (3) | |||
Foreign currency translation | 2 | (5) | |||
Defined Benefit Plan, Benefit Obligation | 64 | 47 | 47 | $ 67 | 64 |
Funded status | (67) | (64) | |||
Amounts recognized in the Consolidated Balance Sheets | |||||
Current liabilities | (4) | (4) | |||
Non-current liabilities | (63) | (60) | |||
Net asset (liability) recognized | (67) | (64) | |||
Amounts recognized in Accumulated Other Comprehensive Loss, excluding tax effects, that have not yet been recognized as components of net periodic benefit cost | |||||
Net actuarial loss | 7 | 7 | |||
Prior service cost | (8) | (11) | |||
Net amount recognized | $ (1) | $ (4) | |||
Components of Net Periodic Benefit Cost | |||||
Service cost | 1 | 1 | 3 | ||
Interest cost | 2 | 3 | 4 | ||
Amortization of prior service credit | 2 | 2 | |||
Net postretirement benefit cost / Net pension cost (credit) | 1 | 2 | 7 | ||
Total recorded in other comprehensive income and net periodic benefit cost | 5 | 4 | |||
Amount related to the amortization of prior service cost included in accumulated other comprehensive loss that will be recognized in net pension expense in next fiscal year | (3) | ||||
Amounts recorded in other comprehensive income and net periodic benefit cost | |||||
Net actuarial loss (gain) | 2 | (2) | |||
Amortization of prior service credit | 2 | 2 | |||
New prior service cost | 2 | ||||
Total recorded in other comprehensive income | 4 | 2 | |||
Net periodic benefit cost | $ 1 | 2 | $ 7 | ||
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Net Prior Service Cost (Credit) Arising During Period, before Tax | $ (2) | ||||
Weighted average assumptions used to determine the company's obligations | |||||
Discount rate (as a percent) | 5.42% | 5.30% | |||
Weighted average assumptions used to determine the company's net periodic benefit cost | |||||
Discount rate (as a percent) | 5.30% | 5.70% | 6.47% | ||
Sensitivity to Trend Assumptions | |||||
One-percentage point increase, effect on service cost and interest cost components | $ 0.6 | ||||
One-percentage point increase, effect on year-end benefit obligations | 7 | ||||
One-percentage point decrease, effect on service cost and interest cost components | (0.5) | ||||
One-percentage point decrease, effect on year-end benefit obligations | $ (6) | ||||
Expected future benefit payments | |||||
2,017 | $ 4 | ||||
2,018 | 4 | ||||
2,019 | 4 | ||||
2,020 | 4 | ||||
2,021 | 4 | ||||
Years 2022 - 2026 | $ 24 | ||||
United States Postretirement Benefit Plan of US Entity, Defined Benefit | |||||
Assumptions used in measuring benefit obligation | |||||
2015 increase in per capita cost (as a percent) | 6.90% | ||||
Ultimate trend (as a percent) | 4.50% | ||||
Canada Postretirement Benefit Plans of US Entity, Defined Benefit | |||||
Assumptions used in measuring benefit obligation | |||||
2015 increase in per capita cost (as a percent) | 6.90% | ||||
Ultimate trend (as a percent) | 4.50% | ||||
Brazil Postretirement Benefit Plans of US Entity, Defined Benefit | |||||
Assumptions used in measuring benefit obligation | |||||
2015 increase in per capita cost (as a percent) | 8.66% | ||||
Ultimate trend (as a percent) | 8.66% |
Supplementary Information - Bal
Supplementary Information - Balance Sheets (Details) - USD ($) $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 |
Accounts receivable net: | ||
Accounts receivable trade | $ 751 | $ 672 |
Accounts receivable other | 178 | 108 |
Allowance for doubtful accounts | (6) | (5) |
Total accounts receivable — net | 923 | 775 |
Inventories: | ||
Finished and in process | 478 | 438 |
Raw materials | 260 | 229 |
Manufacturing supplies and other | 51 | 48 |
Total inventories | 789 | 715 |
Accrued liabilities: | ||
Compensation-related costs | 107 | 84 |
Income taxes payable | 40 | 46 |
Unrecognized tax benefits | 72 | 1 |
Dividends payable | 36 | 33 |
Accrued interest | 19 | 14 |
Taxes payable other than income taxes | 36 | 34 |
Other | 122 | 88 |
Total accrued liabilities | 432 | 300 |
Non-current liabilities: | ||
Employees pension, indemnity and postretirement | 109 | 142 |
Other | 49 | 28 |
Total non-current liabilities | $ 158 | $ 170 |
Supplementary Information - Sta
Supplementary Information - Statements of Income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Other income -net: | |||
Gain on sale of plant | $ 10 | ||
Litigation settlement | (7) | ||
Income tax indemnification (expense) income | (4) | $ 7 | |
Gain from sale of investment | 5 | ||
Gain from sale of idled plant | 3 | ||
Other | $ 4 | 2 | 9 |
Other income - net | 4 | 1 | 24 |
Financing costs-net: | |||
Interest expense, net of amounts capitalized | 73 | 69 | 73 |
Interest income | (10) | (14) | (13) |
Foreign currency transaction losses | 3 | 6 | 1 |
Financing Costs, Net | 66 | 61 | 61 |
Interest capitalized | $ 4 | $ 2 | $ 2 |
Supplementary Information - S64
Supplementary Information - Statements of Cash Flow (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Supplementary Cash Flow Information | |||
Mechanical stores expense | $ 57 | $ 57 | $ 56 |
Share-based compensation expense | 28 | 21 | 19 |
Other | 16 | 18 | (7) |
Total other non-cash charges to net income | 101 | 96 | 68 |
Interest paid | 59 | 52 | 59 |
Income taxes paid | $ 254 | $ 158 | $ 94 |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Millions | Dec. 29, 2014 | Aug. 01, 2014 | Jul. 30, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 12, 2014 |
Preferred stock: | |||||||
Preferred stock, authorized shares | 25,000,000 | 25,000,000 | |||||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | |||||
Preferred Stock, Shares Issued | 0 | 0 | |||||
Preferred stock, outstanding shares | 0 | 0 | |||||
Treasury stock: | |||||||
Delivery of shares | 0 | 435,000 | |||||
Cost to repurchase common shares | $ 34 | ||||||
Payment made for repurchase of shares | $ 8 | $ 41 | $ 304 | ||||
Stock Repurchase 2014 Program | |||||||
Treasury stock: | |||||||
Shares authorized to be repurchased | 5,000,000 | ||||||
Stock Repurchase 2013 Program | |||||||
Treasury stock: | |||||||
Shares authorized to be repurchased | 4,000,000 | ||||||
July 30 2014 Accelerated Share Repurchase Agreement | Share Repurchase Program | |||||||
Treasury stock: | |||||||
Delivery of shares | 671,823 | 3,152,502 | 3,824,325 | ||||
Average purchase prices of treasury stock (in dollars per share) repurchased from employees under the stock incentive plan and the cancellation of restricted stock | $ 78.45 | ||||||
Treasury Stock, Value, Acquired, Cost Method | $ 300 | ||||||
Payment made for repurchase of shares | $ 300 | ||||||
Percentage of repurchase shares received | 80.00% |
Equity (Details)66
Equity (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Increase (decrease) in common stock, number of shares | |||
Purchase/acquisition of common stock shares | 0 | 435,000 | |
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | |||
Pre-tax compensation expense | $ 28 | $ 21 | $ 19 |
Income tax (benefit) | (11) | (8) | (7) |
Total share-based compensation expense, net of income taxes | $ 17 | $ 13 | $ 12 |
Common Stock Issued | |||
Increase (decrease) in common stock, number of shares | |||
Issuance of restricted stock units as compensation | 89,000 | ||
Performance shares and other share-based awards | 49,000 | ||
Treasury Stock | |||
Increase (decrease) in common stock, number of shares | |||
Issuance of restricted stock units as compensation | (94,000) | (102,000) | (24,000) |
Performance shares and other share-based awards | (70,000) | (75,000) | (63,000) |
Stock options exercised | (636,000) | (556,000) | (618,000) |
Purchase/acquisition of common stock shares | 2,000 | 439,000 | 3,833,000 |
Common Stock Shares Outstanding | |||
Increase (decrease) in common stock, number of shares | |||
Issuance of restricted stock units as compensation | 94,000 | 102,000 | 113,000 |
Performance shares and other share-based awards | 70,000 | 75,000 | 112,000 |
Stock options exercised | 636,000 | 556,000 | 618,000 |
Purchase/acquisition of common stock shares | 2,000 | 439,000 | 3,833,000 |
Employee Stock Option | |||
Increase (decrease) in common stock, number of shares | |||
Stock options exercised | 638,000 | ||
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | |||
Pre-tax compensation expense | $ 9 | $ 7 | $ 7 |
Income tax (benefit) | (3) | (3) | (3) |
Total share-based compensation expense, net of income taxes | 6 | 4 | 4 |
Restricted Stock Units (RSUs) | |||
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | |||
Pre-tax compensation expense | 12 | 9 | 8 |
Income tax (benefit) | (5) | (3) | (3) |
Total share-based compensation expense, net of income taxes | 7 | 6 | 5 |
Performance shares and other share-based awards | |||
Employee Service Share-based Compensation, Aggregate Disclosures [Abstract] | |||
Pre-tax compensation expense | 7 | 5 | 4 |
Income tax (benefit) | (3) | (2) | (1) |
Total share-based compensation expense, net of income taxes | $ 4 | $ 3 | $ 3 |
Equity (Details)67
Equity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | Dec. 31, 2016 | Dec. 31, 2015 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Shares Authorized Under Stock Incentive Plan | 8,000 | 8,000 | ||||
Shares available for future grants under Stock Incentive Plan | 4,500 | 4,500 | ||||
Total share-based compensation expense included in net income | $ 28 | $ 21 | $ 19 | |||
Income tax (benefit) | 11 | 8 | 7 | |||
Share Based Compensation Arrangement by Share Based Payment Award, Stock Options, Additional Disclosures [Abstract] | ||||||
Excess tax benefit on share-based compensation | 8 | 6 | ||||
Adjustments for new accounting pronouncements | ||||||
Provision for income taxes | $ (53) | (246) | (187) | (157) | ||
Employee Stock Option | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Total share-based compensation expense included in net income | 9 | 7 | 7 | |||
Income tax (benefit) | $ 3 | $ 3 | $ 3 | |||
Term of options | 10 years | |||||
Required service period | 1 year | |||||
Period of vesting | 3 years | |||||
Weighted average fair value of the shares granted | $ 18.73 | $ 16.04 | $ 12.99 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||||||
Expected life | 5 years 6 months | 5 years 6 months | 5 years 6 months | |||
Risk-free interest rate (as a percent) | 1.40% | 1.40% | 1.60% | |||
Expected volatility (as a percent) | 23.40% | 25.20% | 30.30% | |||
Expected dividend yield (as a percent) | 1.80% | 2.00% | 2.80% | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||||||
Outstanding at the beginning of the period (in shares) | 2,651 | 2,651 | ||||
Granted (in shares) | 329 | |||||
Exercised (in shares) | (638) | |||||
Cancelled (in shares) | (61) | |||||
Outstanding at the end of the period (in shares) | 2,281 | 2,651 | 2,281 | 2,651 | ||
Exercisable at the end of the period (in shares) | 1,547 | 1,547 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||||||
Outstanding at the beginning of the period (in dollars per share) | $ 52.93 | $ 52.93 | ||||
Granted (in dollars per share) | 99.96 | |||||
Exercised (in dollars per share) | 45.90 | |||||
Cancelled (in dollars per share) | 63.96 | |||||
Outstanding at the end of the period (in dollars per share) | $ 61.39 | $ 52.93 | 61.39 | $ 52.93 | ||
Exercisable at the end of the period (in dollars per share) | $ 50.80 | $ 50.80 | ||||
Share Based Compensation Arrangement by Share Based Payment Award, Stock Options, Additional Disclosures [Abstract] | ||||||
Options outstanding average remaining contractual life | 5 years 11 months 5 days | 5 years 11 months 16 days | ||||
Total intrinsic value of stock options exercised | $ 46 | $ 27 | $ 26 | |||
Stock options exercisable average remaining contractual life | 5 years 8 months 12 days | |||||
Options outstanding aggregate intrinsic value | $ 145 | $ 114 | 145 | 114 | ||
Stock options exercisable aggregate intrinsic value | 115 | 115 | ||||
Cash received from exercise of stock options | 29 | $ 21 | $ 20 | |||
Unrecognized compensation cost | $ 4 | $ 4 | ||||
Weighted-average period for amortization of unrecognized compensation cost | 1 year 3 months 18 days | |||||
Accounting Standards Update 2016.09 Excess Tax Benefit | ||||||
Adjustments for new accounting pronouncements | ||||||
Provision for income taxes | $ 12 |
Equity (Details)68
Equity (Details) - USD ($) $ / shares in Units, $ in Millions | Dec. 31, 2016 | Jun. 30, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 |
Other disclosures | ||||||
Total share-based compensation expense included in net income | $ 28 | $ 21 | $ 19 | |||
Share-based payments subject to redemption | $ 30 | $ 30 | $ 24 | |||
Restricted Stock [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||||
Non-vested at the beginning of the period (in shares) | 439,000 | 439,000 | ||||
Granted (in shares) | 152,000 | |||||
Vested (in shares) | (134,000) | |||||
Cancelled (in shares) | (28,000) | |||||
Non-vested at the end of the period (in shares) | 429,000 | 429,000 | 439,000 | |||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||||||
Non-vested at the beginning of the period (in dollars per share) | $ 69.96 | $ 69.96 | ||||
Granted (in dollars per share) | 101.21 | |||||
Vested (in dollars per share) | 65.83 | |||||
Cancelled (in dollars per share) | 79.66 | |||||
Non-vested at the end of the period (in dollars per share) | $ 81.04 | $ 81.04 | $ 69.96 | |||
Restricted Stock Units (RSUs) | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting terms | 3 years | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||||||
Fair value of awards vested during the year | $ 15 | $ 13 | 11 | |||
Unrecognized compensation cost | $ 14 | $ 14 | ||||
Weighted-average period for amortization of unrecognized compensation cost | 1 year 8 months 12 days | |||||
Other disclosures | ||||||
Total share-based compensation expense included in net income | $ 12 | 9 | 8 | |||
Compensation cost related to unvested restricted share and restricted stock units and performance shares included in share-based payments subject to redemption on the Balance Sheet | $ 21 | $ 21 | 17 | |||
Restricted Stock Units (RSUs) | Compensation Arrangement | Director | ||||||
Other disclosures | ||||||
Awards outstanding (in shares) | 175,000 | 175,000 | ||||
Carrying value of share units outstanding | $ 9 | $ 9 | ||||
Total share-based compensation expense included in net income | $ 1 | $ 1 | $ 1 | |||
Performance Shares award | Long Term Incentive Plan | Senior Management | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting terms | 3 years | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||||
Granted (in shares) | 44,000 | 47,000 | 58,000 | 45,000 | ||
Vested (in shares) | (90,000) | |||||
Cancelled (in shares) | 0 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||||||
Granted (in dollars per share) | $ 131.34 | $ 77.54 | $ 52.03 | $ 67.19 | ||
Unrecognized compensation cost | $ 3 | $ 3 | ||||
Award payout achieved (as a percent) | 200.00% | |||||
Remaining requisite service period (in years) | 1 year 9 months 18 days | |||||
Other disclosures | ||||||
Performance shares calculation period (in years) | 3 years | |||||
Compensation cost related to unvested restricted share and restricted stock units and performance shares included in share-based payments subject to redemption on the Balance Sheet | $ 9 | $ 9 | $ 7 | |||
Performance Shares award | Long Term Incentive Plan | Senior Management | Minimum | ||||||
Other disclosures | ||||||
Performance shares available for vesting (as a percent) | 0.00% | |||||
Performance Shares award | Long Term Incentive Plan | Senior Management | Maximum | ||||||
Other disclosures | ||||||
Performance shares available for vesting (as a percent) | 200.00% | |||||
Performance Shares Award Granted In 2016 | Long Term Incentive Plan | Senior Management | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||||||
Award payout achieved (as a percent) | 160.00% | |||||
Performance shares award granted in 2014 and 2015 | Long Term Incentive Plan | Senior Management | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||||||
Award payout achieved (as a percent) | 200.00% |
Equity (Details)69
Equity (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance at the beginning of the period | $ (1,102) | $ (782) | $ (583) |
Losses on cash-flow hedges, net of income tax effect of $6, $19, and $12 | (11) | (42) | (29) |
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $16, $14 and $23 | 33 | 32 | 50 |
Actuarial gain (loss) on pension and other postretirement obligations, settlements and plan amendments, net of income tax effect of $4, $5 and $5, respectively | (10) | 13 | (12) |
Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect of $-, $- and $1, respectively | 1 | 1 | 4 |
Unrealized gain on investments, net of income tax effect | 1 | ||
Currency translation adjustment | 7 | (324) | (212) |
Currency translation adjustment | 17 | ||
Balance at end of the period | (1,071) | (1,102) | (782) |
Other Comprehensive Income (Loss), Tax [Abstract] | |||
Losses on cash-flow hedges, income tax effect | (6) | (19) | (12) |
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of | (16) | (14) | (23) |
Actuarial gains on pension and postretirement obligations, settlements and plan amendments, income tax effect | (4) | 5 | (5) |
Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect | (1) | ||
Accumulated Translation Adjustment [Member] | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance at the beginning of the period | (1,025) | (701) | (489) |
Currency translation adjustment | (324) | (212) | |
Currency translation adjustment | 17 | ||
Balance at end of the period | (1,008) | (1,025) | (701) |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance at the beginning of the period | (29) | (19) | (40) |
Losses on cash-flow hedges, net of income tax effect of $6, $19, and $12 | (11) | (42) | (29) |
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $16, $14 and $23 | 33 | 32 | 50 |
Balance at end of the period | (7) | (29) | (19) |
Other Comprehensive Income (Loss), Tax [Abstract] | |||
Losses on cash-flow hedges, income tax effect | (6) | (19) | (12) |
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of | (16) | (14) | (23) |
Accumulated Defined Benefit Plans Adjustment | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance at the beginning of the period | (47) | (61) | (53) |
Actuarial gain (loss) on pension and other postretirement obligations, settlements and plan amendments, net of income tax effect of $4, $5 and $5, respectively | (10) | 13 | (12) |
Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect of $-, $- and $1, respectively | 1 | 1 | 4 |
Balance at end of the period | (56) | (47) | (61) |
Other Comprehensive Income (Loss), Tax [Abstract] | |||
Actuarial gains on pension and postretirement obligations, settlements and plan amendments, income tax effect | (4) | 5 | (5) |
Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect | (1) | ||
Accumulated Net Unrealized Investment Gain (Loss) | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance at the beginning of the period | (1) | (1) | (1) |
Unrealized gain on investments, net of income tax effect | $ 1 | ||
Balance at end of the period | $ (1) | $ (1) |
Equity (Details)70
Equity (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Gross Profit | $ 339 | $ 369 | $ 355 | $ 339 | $ 313 | $ 330 | $ 319 | $ 281 | $ 1,402 | $ 1,242 | $ 1,115 |
Financing costs-net | 66 | 61 | 61 | ||||||||
Before tax reclassifications | (50) | (47) | (78) | ||||||||
Income tax benefit | 16 | 14 | 24 | ||||||||
Total after-tax reclassifications | (34) | (33) | (54) | ||||||||
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Reclassification out of Accumulated Other Comprehensive Income | Commodity and Foreign Currency Contracts | |||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Gross Profit | (47) | (43) | (70) | ||||||||
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Reclassification out of Accumulated Other Comprehensive Income | Interest Rate Contract | |||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Financing costs-net | 2 | 3 | 3 | ||||||||
Accumulated Defined Benefit Plans Adjustment | Reclassification out of Accumulated Other Comprehensive Income | |||||||||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||||||||||
Losses related to pension and other postretirement obligations | $ 1 | $ 1 | $ 5 |
Equity (Details)71
Equity (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Basic EPS: | |||||||||||
Net Income Available to Ingredion - basic | $ 484.9 | $ 402.2 | $ 354.9 | ||||||||
Weighted average number of shares outstanding, basic | 72.3 | 71.6 | 73.6 | ||||||||
Basic earnings per common share of Ingredion (in dollars per share) | $ 1.29 | $ 1.98 | $ 1.62 | $ 1.81 | $ 1.45 | $ 1.51 | $ 1.49 | $ 1.17 | $ 6.70 | $ 5.62 | $ 4.82 |
Effect of Dilutive Securities: | |||||||||||
Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards | 1.8 | 1.4 | 1.3 | ||||||||
Diluted EPS: | |||||||||||
Net Income Available to Ingredion - diluted | $ 484.9 | $ 402.2 | $ 354.9 | ||||||||
Weighted Average Number of Shares Outstanding, Diluted, Total | 73.6 | 74.1 | 73 | 74.9 | |||||||
Earnings Per Share, Diluted | $ 1.26 | $ 1.93 | $ 1.58 | $ 1.77 | $ 1.42 | $ 1.48 | $ 1.47 | $ 1.15 | $ 6.55 | $ 5.51 | $ 4.74 |
Antidilutive securities excluded in calculation of diluted EPS: | |||||||||||
Antidilutive securities excluded from computation of earnings per share amount | 0.3 | 0.1 |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Segment information | |||||||||||
Number of reportable business segments | item | 4 | ||||||||||
Net sales | $ 1,399 | $ 1,489 | $ 1,455 | $ 1,360 | $ 1,405 | $ 1,437 | $ 1,449 | $ 1,330 | $ 5,704 | $ 5,621 | $ 5,668 |
Operating income | 808 | 660 | 581 | ||||||||
Impairment / restructuring charges | (19) | (28) | (33) | ||||||||
Restructuring charges | (19) | ||||||||||
Acquisition / integration costs | (1.4) | (3) | (10) | (2) | |||||||
Charge for fair value markup of acquired inventory | (10) | ||||||||||
Litigation settlement | 7 | ||||||||||
Total Assets | 5,782 | 5,074 | 5,782 | 5,074 | 5,085 | ||||||
Depreciation and amortization | 196 | 194 | 195 | ||||||||
Capital expenditures | 284 | 280 | 276 | ||||||||
Gain from sale of plant | 10 | ||||||||||
Income Tax Expense (Benefit) | $ 53 | 246 | 187 | 157 | |||||||
Write-off of impaired goodwill | 0 | 0 | 33 | ||||||||
Long-lived assets | 2,237 | 2,106 | 2,237 | 2,106 | 2,169 | ||||||
KENYA | |||||||||||
Segment information | |||||||||||
Gain from sale of plant | 3 | ||||||||||
North America | |||||||||||
Segment information | |||||||||||
Restructuring charges | (4) | ||||||||||
Southern Cone of South America | |||||||||||
Segment information | |||||||||||
Write-off of impaired goodwill | 33 | ||||||||||
UNITED STATES | |||||||||||
Segment information | |||||||||||
Net sales | 2,117 | 1,983 | 1,681 | ||||||||
Long-lived assets | 955 | 920 | 955 | 920 | 803 | ||||||
BRAZIL | |||||||||||
Segment information | |||||||||||
Net sales | 522 | 452 | 591 | ||||||||
Impairment / restructuring charges | (12) | ||||||||||
Long-lived assets | 245 | 196 | 245 | 196 | 294 | ||||||
MEXICO | |||||||||||
Segment information | |||||||||||
Net sales | 955 | 945 | 955 | ||||||||
Long-lived assets | 303 | 292 | 303 | 292 | 296 | ||||||
CANADA | |||||||||||
Segment information | |||||||||||
Net sales | 375 | 417 | 457 | ||||||||
Impairment / restructuring charges | (4) | ||||||||||
Long-lived assets | 147 | 126 | 147 | 126 | 154 | ||||||
GERMANY | |||||||||||
Segment information | |||||||||||
Long-lived assets | 106 | 114 | 106 | 114 | 133 | ||||||
THAILAND | |||||||||||
Segment information | |||||||||||
Long-lived assets | 119 | 111 | 119 | 111 | 105 | ||||||
ARGENTINA | |||||||||||
Segment information | |||||||||||
Net sales | 201 | 252 | 262 | ||||||||
Long-lived assets | 60 | 64 | 60 | 64 | 82 | ||||||
KOREA, REPUBLIC OF | |||||||||||
Segment information | |||||||||||
Net sales | 266 | 276 | 295 | ||||||||
Long-lived assets | 84 | 83 | 84 | 83 | 88 | ||||||
Other Countries | |||||||||||
Segment information | |||||||||||
Net sales | 1,268 | 1,296 | 1,427 | ||||||||
Long-lived assets | 218 | 200 | 218 | 200 | 214 | ||||||
North America | |||||||||||
Segment information | |||||||||||
Net sales | 3,447 | 3,345 | 3,093 | ||||||||
Total Assets | 3,796 | 3,163 | 3,796 | 3,163 | 2,901 | ||||||
Depreciation and amortization | 130 | 123 | 111 | ||||||||
Capital expenditures | 167 | 158 | 130 | ||||||||
South America | |||||||||||
Segment information | |||||||||||
Net sales | 1,010 | 1,013 | 1,203 | ||||||||
Total Assets | 809 | 714 | 809 | 714 | 923 | ||||||
Depreciation and amortization | 26 | 30 | 38 | ||||||||
Capital expenditures | 56 | 61 | 90 | ||||||||
Write-off of impaired goodwill | 33 | ||||||||||
Asia Pacific | |||||||||||
Segment information | |||||||||||
Net sales | 709 | 733 | 794 | ||||||||
Total Assets | 697 | 716 | 697 | 716 | 711 | ||||||
Depreciation and amortization | 23 | 23 | 26 | ||||||||
Capital expenditures | 41 | 36 | 30 | ||||||||
EMEA | |||||||||||
Segment information | |||||||||||
Net sales | 538 | 530 | 578 | ||||||||
Total Assets | $ 480 | $ 481 | 480 | 481 | 550 | ||||||
Depreciation and amortization | 17 | 18 | 20 | ||||||||
Capital expenditures | 20 | 25 | 26 | ||||||||
Penford | |||||||||||
Segment information | |||||||||||
Restructuring charges | (12) | ||||||||||
Employee severance costs | 12 | ||||||||||
Operating Segments | |||||||||||
Segment information | |||||||||||
Operating income | 830 | 705 | 616 | ||||||||
Operating Segments | North America | |||||||||||
Segment information | |||||||||||
Operating income | 610 | 479 | 375 | ||||||||
Operating Segments | South America | |||||||||||
Segment information | |||||||||||
Operating income | 89 | 101 | 108 | ||||||||
Operating Segments | Asia Pacific | |||||||||||
Segment information | |||||||||||
Operating income | 111 | 107 | 103 | ||||||||
Operating Segments | EMEA | |||||||||||
Segment information | |||||||||||
Operating income | 106 | 93 | 95 | ||||||||
Corporate, Non -Segment | |||||||||||
Segment information | |||||||||||
Operating income | (86) | (75) | (65) | ||||||||
Expense relating to tax indemnification agreement | 4 | ||||||||||
Income relating to tax indemnification agreement | 7 | ||||||||||
Income Tax Expense (Benefit) | $ (4) | $ 7 | |||||||||
Employee Severance related costs | IT transformation | |||||||||||
Segment information | |||||||||||
Employee severance costs | 6 | ||||||||||
Employee Severance And Other Costs | IT transformation | |||||||||||
Segment information | |||||||||||
Restructuring charges | (11) | ||||||||||
Port Colborne Ontario Canada Plant | Facility Closing | |||||||||||
Segment information | |||||||||||
Restructuring charges | (2) | ||||||||||
North America And South America Employee Related Severance | Employee Severance related costs | |||||||||||
Segment information | |||||||||||
Employee severance costs | $ 6 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
BRAZIL | |
Commitments and Contingencies | |
Reserve maintained for labor claims | $ 5 |
Quarterly Financial Data (Una74
Quarterly Financial Data (Unaudited) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly financial data, restructuring activity | |||||||||||
Net sales before shipping and handling costs | $ 1,484,000,000 | $ 1,569,000,000 | $ 1,533,000,000 | $ 1,434,000,000 | $ 1,489,000,000 | $ 1,524,000,000 | $ 1,536,000,000 | $ 1,410,000,000 | $ 6,022,000,000 | $ 5,958,000,000 | $ 5,998,000,000 |
Less: shipping and handling costs | 85,000,000 | 80,000,000 | 78,000,000 | 74,000,000 | 84,000,000 | 87,000,000 | 87,000,000 | 80,000,000 | 318,000,000 | 337,000,000 | 330,000,000 |
Net sales | 1,399,000,000 | 1,489,000,000 | 1,455,000,000 | 1,360,000,000 | 1,405,000,000 | 1,437,000,000 | 1,449,000,000 | 1,330,000,000 | 5,704,000,000 | 5,621,000,000 | 5,668,000,000 |
Gross profit | 339,000,000 | 369,000,000 | 355,000,000 | 339,000,000 | 313,000,000 | 330,000,000 | 319,000,000 | 281,000,000 | 1,402,000,000 | 1,242,000,000 | 1,115,000,000 |
Net income attributable to Ingredion | $ 94,000,000 | $ 143,000,000 | $ 117,000,000 | $ 130,000,000 | $ 104,000,000 | $ 108,000,000 | $ 107,000,000 | $ 84,000,000 | $ 485,000,000 | $ 402,000,000 | $ 355,000,000 |
Basic earnings per common share of Ingredion (in dollars per share) | $ 1.29 | $ 1.98 | $ 1.62 | $ 1.81 | $ 1.45 | $ 1.51 | $ 1.49 | $ 1.17 | $ 6.70 | $ 5.62 | $ 4.82 |
Diluted earnings per common share of Ingredion (in dollars per share) | $ 1.26 | $ 1.93 | $ 1.58 | $ 1.77 | $ 1.42 | $ 1.48 | $ 1.47 | $ 1.15 | $ 6.55 | $ 5.51 | $ 4.74 |
Acquisition / integration costs | $ 1,400,000 | $ 3,000,000 | $ 10,000,000 | $ 2,000,000 | |||||||
Acquisition and integration costs after-tax | 900,000 | ||||||||||
Tax Settlement Expense Adjustment | $ 27,000,000 | ||||||||||
Income tax settlement (in dollars per share) | $ 0.36 | ||||||||||
Restructuring/impairment charges | $ 19,000,000 | ||||||||||
Litigation settlement cost | $ 6,800,000 | ||||||||||
Cost of litigation settlement, after tax | $ 4,300,000 | ||||||||||
Litigation settlement, (in dollars per share) | $ 0.06 | ||||||||||
Acquisition and integration costs per diluted common share | $ 0.01 | ||||||||||
North America | |||||||||||
Quarterly financial data, restructuring activity | |||||||||||
Restructuring/impairment charges | 4,000,000 | ||||||||||
Restructuring charges, after-tax | $ 2,500,000 | ||||||||||
Restructuring charges, per diluted share (in dollars per share) | $ 0.03 | ||||||||||
Canada, the US and Brazil | |||||||||||
Quarterly financial data, restructuring activity | |||||||||||
Restructuring/impairment charges | $ 3,800,000 | ||||||||||
Restructuring charges, after-tax | $ 2,600,000 | ||||||||||
Restructuring charges, per diluted share (in dollars per share) | $ 0.04 | ||||||||||
Manufacturing assets in Port Colborne, Ontario, Canada | |||||||||||
Quarterly financial data, restructuring activity | |||||||||||
Gain on disposal | $ 9,800,000 | ||||||||||
Gain on disposal, after tax | $ 8,900,000 | ||||||||||
Gain on disposal (in dollars per share) | $ 0.12 | ||||||||||
Penford | |||||||||||
Quarterly financial data, restructuring activity | |||||||||||
Restructuring/impairment charges | $ 12,000,000 | ||||||||||
Kerr | |||||||||||
Quarterly financial data, restructuring activity | |||||||||||
Cost of acquired inventory sold that was adjusted to fair value | $ 1,800,000 | ||||||||||
After tax cost of acquired inventory sold that is adjusted to fair value | $ 1,100,000 | ||||||||||
Fair value of acquired inventory (in dollars per share) | $ 0.02 | ||||||||||
Penford and Kerr | |||||||||||
Quarterly financial data, restructuring activity | |||||||||||
Acquisition and integration costs after-tax | $ 600,000 | ||||||||||
Acquisition and integration costs | 700,000 | ||||||||||
Acquisition and integration costs per diluted common share | $ 0.01 |