Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2020 | Oct. 31, 2020 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2020 | |
Document Transition Report | false | |
Entity File Number | 1-13397 | |
Entity Registrant Name | Ingredion Inc | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 22-3514823 | |
Entity Address, Address Line One | 5 Westbrook Corporate Center | |
Entity Address, City or Town | Westchester | |
Entity Address, State or Province | IL | |
Entity Address, Postal Zip Code | 60154 | |
City Area Code | 708 | |
Local Phone Number | 551-2600 | |
Title of 12(b) Security | Common Stock, $.01 par value per share | |
Trading Symbol | INGR | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 66,990,288 | |
Entity Central Index Key | 0001046257 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Condensed Consolidated Statements of Income | ||||
Net sales | $ 1,502 | $ 1,574 | $ 4,394 | $ 4,660 |
Cost of sales | 1,176 | 1,230 | 3,474 | 3,671 |
Gross profit | 326 | 344 | 920 | 989 |
Operating expenses | 155 | 153 | 456 | 457 |
Other expense (income), net | 2 | (2) | 4 | (3) |
Restructuring/impairment charges | 16 | 28 | 41 | 41 |
Operating income | 153 | 165 | 419 | 494 |
Financing costs, net | 22 | 24 | 59 | 62 |
Other, non-operating (income) expense, net | (2) | 1 | (3) | 1 |
Income before income taxes | 133 | 140 | 363 | 431 |
Provision for income taxes | 40 | 38 | 125 | 120 |
Net income | 93 | 102 | 238 | 311 |
Less: Net income attributable to non-controlling interests | 1 | 3 | 5 | 7 |
Net income attributable to Ingredion | $ 92 | $ 99 | $ 233 | $ 304 |
Weighted average common shares outstanding: | ||||
Basic (in shares) | 67.2 | 66.9 | 67.2 | 66.9 |
Diluted (in shares) | 67.6 | 67.4 | 67.6 | 67.4 |
Earnings per common share of Ingredion: | ||||
Basic (in dollars per share) | $ 1.37 | $ 1.48 | $ 3.47 | $ 4.54 |
Diluted (in dollars per share) | $ 1.36 | $ 1.47 | $ 3.45 | $ 4.51 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Condensed Consolidated Statements of Comprehensive Income | ||||
Net income | $ 93 | $ 102 | $ 238 | $ 311 |
Other comprehensive income: | ||||
Gains (losses) on cash flow hedges, net of income tax effect of $4, $4, $12 and $4, respectively | 12 | (13) | (38) | (12) |
Losses (gains) on cash flow hedges reclassified to earnings, net of income tax effect of $8, $ - , $14 and $1, respectively | 23 | (3) | 42 | 2 |
Actuarial losses on pension and other postretirement obligations, settlements and plan amendments, net of income tax effect of $ - | (1) | (2) | ||
Currency translation adjustment | 13 | (45) | (105) | (48) |
Comprehensive income | 141 | 40 | 137 | 251 |
Less: Comprehensive income attributable to non-controlling interests | 3 | 5 | 5 | 5 |
Comprehensive income attributable to Ingredion | $ 138 | $ 35 | $ 132 | $ 246 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Parenthetical) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Condensed Consolidated Statements of Comprehensive Income | ||||
Gains (losses) on cash flow hedges, income tax benefit | $ (4) | $ 4 | $ 12 | $ 4 |
Losses (gains) on cash-flow hedges reclassified to earnings, income tax benefit (expense) | $ (8) | $ (14) | $ (1) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheet - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 553 | $ 264 |
Short-term investments | 4 | |
Accounts receivable, net | 913 | 977 |
Inventories | 908 | 861 |
Prepaid expenses | 56 | 54 |
Total current assets | 2,430 | 2,160 |
Property, plant and equipment, net of accumulated depreciation of $3,087 and $3,056, respectively | 2,354 | 2,306 |
Goodwill | 841 | 801 |
Other intangible assets, net of accumulated amortization of $220 and $197, respectively | 479 | 437 |
Operating lease assets | 161 | 151 |
Deferred income tax assets | 23 | 13 |
Other assets | 176 | 172 |
Total assets | 6,464 | 6,040 |
Current liabilities: | ||
Short-term borrowings | 62 | 82 |
Accounts payable and accrued liabilities | 893 | 885 |
Total current liabilities | 955 | 967 |
Non-current liabilities | 211 | 220 |
Long-term debt | 2,115 | 1,766 |
Non-current operating lease liabilities | 123 | 120 |
Deferred income tax liabilities | 189 | 195 |
Total liabilities | 3,593 | 3,268 |
Share-based payments subject to redemption | 32 | 31 |
Redeemable non-controlling interests | 74 | |
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 September 30, 2020 and December 31, 2019, respectively | 1 | 1 |
Additional paid-in capital | 1,145 | 1,137 |
Less: Treasury stock (common stock: 10,822,592 and 10,993,388 shares at September 30, 2020 and December 31, 2019, respectively) at cost | (1,027) | (1,040) |
Accumulated other comprehensive loss | (1,259) | (1,158) |
Retained earnings | 3,884 | 3,780 |
Total Ingredion stockholders' equity | 2,744 | 2,720 |
Non-redeemable non-controlling interests | 21 | 21 |
Total equity | 2,765 | 2,741 |
Total liabilities and equity | $ 6,464 | $ 6,040 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheet (Parenthetical) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Condensed Consolidated Balance Sheet | ||
Property, plant and equipment, Accumulated depreciation | $ 3,087 | $ 3,056 |
Other intangible assets - accumulated amortization (in dollars) | $ 220 | $ 197 |
Preferred stock, authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, issued (in shares) | 0 | 0 |
Common stock, authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, issued (in shares) | 77,810,875 | 77,810,875 |
Treasury stock (in shares) | 10,822,592 | 10,993,388 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Equity - USD ($) $ in Millions | Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Non-Controlling Interests | Total |
Balance at Dec. 31, 2018 | $ 1 | $ 1,096 | $ (1,091) | $ (1,154) | $ 3,536 | $ 20 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 100 | 2 | |||||
Dividends declared | (42) | ||||||
Repurchases of common stock, net | 32 | 31 | |||||
Share-based compensation, net of issuance | 9 | 10 | |||||
Other comprehensive income (loss) | (6) | ||||||
Balance at Mar. 31, 2019 | 1 | 1,137 | (1,050) | (1,160) | 3,594 | 22 | |
Balance at Dec. 31, 2018 | 1 | 1,096 | (1,091) | (1,154) | 3,536 | 20 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 304 | 7 | |||||
Dividends declared | (127) | (6) | |||||
Repurchases of common stock, net | 32 | 31 | |||||
Share-based compensation, net of issuance | 9 | 16 | |||||
Other comprehensive income (loss) | (60) | (2) | |||||
Balance at Sep. 30, 2019 | 1 | 1,137 | (1,044) | (1,214) | 3,713 | 19 | |
Balance at Mar. 31, 2019 | 1 | 1,137 | (1,050) | (1,160) | 3,594 | 22 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 105 | 2 | |||||
Dividends declared | (43) | (4) | |||||
Share-based compensation, net of issuance | 1 | 3 | |||||
Other comprehensive income (loss) | 8 | (4) | |||||
Balance at Jun. 30, 2019 | 1 | 1,138 | (1,047) | (1,152) | 3,656 | 16 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 99 | 3 | |||||
Dividends declared | (42) | (2) | |||||
Share-based compensation, net of issuance | (1) | 3 | |||||
Other comprehensive income (loss) | (62) | 2 | |||||
Balance at Sep. 30, 2019 | 1 | 1,137 | (1,044) | (1,214) | 3,713 | 19 | |
Balance at Dec. 31, 2019 | 1 | 1,137 | (1,040) | (1,158) | 3,780 | 21 | $ 2,741 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 75 | 3 | |||||
Dividends declared | (42) | ||||||
Share-based compensation, net of issuance | 5 | 12 | |||||
Other comprehensive income (loss) | (164) | (3) | |||||
Balance at Mar. 31, 2020 | 1 | 1,142 | (1,028) | (1,322) | 3,813 | 21 | |
Balance at Dec. 31, 2019 | 1 | 1,137 | (1,040) | (1,158) | 3,780 | 21 | 2,741 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 233 | 7 | |||||
Dividends declared | (129) | (5) | |||||
Share-based compensation, net of issuance | 8 | 13 | |||||
Other comprehensive income (loss) | (101) | (2) | |||||
Balance at Sep. 30, 2020 | 1 | 1,145 | (1,027) | (1,259) | 3,884 | 21 | 2,765 |
Balance at Mar. 31, 2020 | 1 | 1,142 | (1,028) | (1,322) | 3,813 | 21 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 66 | 1 | |||||
Dividends declared | (43) | (3) | |||||
Share-based compensation, net of issuance | 1 | 1 | |||||
Other comprehensive income (loss) | 15 | 1 | |||||
Balance at Jun. 30, 2020 | 1 | 1,143 | (1,027) | (1,307) | 3,836 | 20 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income (loss) | 92 | 3 | |||||
Dividends declared | (44) | (2) | |||||
Share-based compensation, net of issuance | 2 | ||||||
Other comprehensive income (loss) | 48 | ||||||
Balance at Sep. 30, 2020 | $ 1 | $ 1,145 | $ (1,027) | $ (1,259) | $ 3,884 | $ 21 | $ 2,765 |
Condensed Consolidated Statem_5
Condensed Consolidated Statement of Redeemable Equity $ in Millions | USD ($) |
Share-based Payments Subject to Redemption, Beginning Balance at Dec. 31, 2018 | $ 37 |
Increase (Decrease) in Temporary Equity | |
Share-based compensation, net of issuance | (16) |
Share-based Payments Subject to Redemption, Ending Balance at Mar. 31, 2019 | 21 |
Share-based Payments Subject to Redemption, Beginning Balance at Dec. 31, 2018 | 37 |
Increase (Decrease) in Temporary Equity | |
Share-based compensation, net of issuance | (9) |
Share-based Payments Subject to Redemption, Ending Balance at Sep. 30, 2019 | 28 |
Share-based Payments Subject to Redemption, Beginning Balance at Mar. 31, 2019 | 21 |
Increase (Decrease) in Temporary Equity | |
Share-based compensation, net of issuance | 4 |
Share-based Payments Subject to Redemption, Ending Balance at Jun. 30, 2019 | 25 |
Increase (Decrease) in Temporary Equity | |
Share-based compensation, net of issuance | 3 |
Share-based Payments Subject to Redemption, Ending Balance at Sep. 30, 2019 | 28 |
Share-based Payments Subject to Redemption, Beginning Balance at Dec. 31, 2019 | 31 |
Increase (Decrease) in Temporary Equity | |
Share-based compensation, net of issuance | (8) |
Share-based Payments Subject to Redemption, Ending Balance at Mar. 31, 2020 | 23 |
Share-based Payments Subject to Redemption, Beginning Balance at Dec. 31, 2019 | 31 |
Increase (Decrease) in Temporary Equity | |
Share-based compensation, net of issuance | 1 |
Share-based Payments Subject to Redemption, Ending Balance at Sep. 30, 2020 | 32 |
Increase (Decrease) in Temporary Equity | |
Net income (loss) attributable to non-controlling interests | (2) |
Acquisition of redeemable non-controlling interests | 74 |
Other comprehensive (loss) income | 2 |
Redeemable Non-Controlling Interests, Ending Balance at Sep. 30, 2020 | 74 |
Share-based Payments Subject to Redemption, Beginning Balance at Mar. 31, 2020 | 23 |
Increase (Decrease) in Temporary Equity | |
Share-based compensation, net of issuance | 4 |
Share-based Payments Subject to Redemption, Ending Balance at Jun. 30, 2020 | 27 |
Increase (Decrease) in Temporary Equity | |
Share-based compensation, net of issuance | 5 |
Share-based Payments Subject to Redemption, Ending Balance at Sep. 30, 2020 | 32 |
Increase (Decrease) in Temporary Equity | |
Net income (loss) attributable to non-controlling interests | (2) |
Acquisition of redeemable non-controlling interests | 74 |
Other comprehensive (loss) income | 2 |
Redeemable Non-Controlling Interests, Ending Balance at Sep. 30, 2020 | $ 74 |
Condensed Consolidated Statem_6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Cash provided by operating activities | ||
Net income | $ 238 | $ 311 |
Non-cash charges to net income: | ||
Depreciation and amortization | 158 | 158 |
Mechanical stores expense | 39 | 42 |
Deferred income taxes | (1) | 2 |
Charge for fair value markup of acquired inventory | 3 | |
Other | 46 | 21 |
Changes in working capital: | ||
Accounts receivable and prepaid expenses | 36 | (56) |
Inventories | (10) | (71) |
Accounts payable and accrued liabilities | 54 | 76 |
Margin accounts | 6 | (4) |
Other | (7) | 11 |
Cash provided by operating activities | 562 | 490 |
Cash used for investing activities | ||
Capital expenditures and mechanical stores purchases, net of proceeds on disposals | (250) | (231) |
Payments for acquisitions, net of cash acquired of $14 and $4, respectively | (208) | (42) |
Investment in non-consolidated affiliates | (6) | (10) |
Short-term investments | 4 | 4 |
Other | 1 | |
Cash used for investing activities | (460) | (278) |
Cash provided by (used for) financing activities | ||
Proceeds from borrowings | 1,527 | 839 |
Payments on debt | (1,186) | (858) |
Payments for debt issuance costs | (9) | |
Repurchases of common stock, net | 63 | |
Issuances of common stock for share-based compensation, net of settlements | 2 | 1 |
Dividends paid, including to non-controlling interests | (132) | (131) |
Cash provided by (used for) financing activities | 202 | (86) |
Effects of foreign exchange rate changes on cash | (15) | (10) |
Increase (decrease) in cash and cash equivalents | 289 | 116 |
Cash and cash equivalents, beginning of period | 264 | 327 |
Cash and cash equivalents, end of period | $ 553 | $ 443 |
Condensed Consolidated Statem_7
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Condensed Consolidated Statements of Cash Flows | ||
Cash acquired from acquisition | $ 14 | $ 4 |
Interim Financial Statements
Interim Financial Statements | 9 Months Ended |
Sep. 30, 2020 | |
Interim Financial Statements | |
Interim Financial Statements | 1. Interim Financial Statements References to the “Company” are to Ingredion Incorporated (“Ingredion”) and its consolidated subsidiaries. These statements should be read in conjunction with the consolidated financial statements and the related notes to those statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The unaudited Condensed Consolidated Financial Statements as of September 30, 2020 and for the three and nine months ended September 30, 2020 and 2019 included herein were prepared by management on the same basis as the Company’s audited Consolidated Financial Statements for the year ended December 31, 2019 and reflect all adjustments (consisting solely of normal recurring items unless otherwise noted) which are, in the opinion of management, necessary for the fair presentation of the Condensed Consolidated Statements of Income, Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Equity and Redeemable Equity, and Condensed Consolidated Statements of Cash Flows. The results for the interim period are not necessarily indicative of the results expected for the full year or any other future period. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Standards and Policies | 2. Summary of Significant Accounting Standards and Policies For detailed information about the Company’s significant accounting standards, see Note 2 of the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. Except for the matters discussed below, there have been no other material changes to the Company’s significant accounting policies for the nine months ended September 30, 2020. Recently Adopted Accounting Standards ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350) In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . This ASU simplifies the subsequent measurement of goodwill as this ASU eliminates Step 2 from the goodwill impairment test. Under this ASU, an entity will continue to perform its annual, or interim, goodwill impairment test to determine if the fair value of a reporting unit is greater than its carrying amount. An entity should then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value using the results of its Step 1 assessment, with the loss recognized not to exceed the total amount of goodwill allocated to that reporting unit. This ASU is effective for annual periods beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2017-04 at the beginning of its 2020 fiscal year, and this ASU did not have a material impact on the Company’s Condensed Consolidated Financial Statements upon adoption. ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. This ASU is effective for annual periods beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2016-13 at the beginning of its 2020 fiscal year, and this ASU did not have a material impact on the Company’s Condensed Consolidated Financial Statements upon adoption. Significant Accounting Policies Indefinite-lived intangible assets and goodwill: (in millions) Balance at September 30, 2020 Balance at December 31, 2019 Trademarks/tradenames (indefinite-lived) $ 178 $ 178 The original carrying value of goodwill and accumulated impairment charges by reportable business segment at September 30, 2020 was as follows: North South Asia- (in millions) America America Pacific EMEA Total Goodwill before impairment charges $ 608 $ 54 $ 229 $ 65 $ 956 Accumulated impairment charges (1) (33) (121) — (155) Balance at January 1, 2020 607 21 108 65 801 Acquisitions — — 48 — 48 Currency translation — (6) (3) 1 (8) Balance at September 30, 2020 $ 607 $ 15 $ 153 $ 66 $ 841 The Company assesses indefinite-lived intangible assets and goodwill for impairment annually (or more frequently if impairment indicators arise). The Company performs this annual impairment assessment as of July 1 each year. 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 less than its carrying value. After assessing the qualitative factors, if the Company determines that it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is greater 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 assets and perform a quantitative impairment test in accordance with Accounting Standards Codification (“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 its assessment, the Company concluded that as of July 1, 2020, there were no impairments in its indefinite-lived intangible assets. 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 more-likely-than-not that the fair value of a reporting unit is greater than its carrying amount, then the Company does not perform an impairment test. If the Company concludes otherwise, then it performs an impairment test as described in ASC subtopic 350-30. This test compares the fair value of the reporting unit 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, an impairment is recorded. Based on the results of the annual assessment, the Company concluded that as of July 1, 2020, there were no impairments in its reporting units. Net Sales Presentation Change During the three months ended December 31, 2019, the Company changed its presentation of shipping and handling costs. These expenses were previously included as a reduction to Net sales in the Condensed Consolidated Statements of Income. The Company is now presenting these expenses within Cost of sales in the Condensed Consolidated Statements of Income. The change in presentation was applied retrospectively to all periods presented in the Condensed Consolidated Statements of Income. The change in presentation had no effect on Gross profit, Operating income, Net income, or Earnings per share. The Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Statements of Equity and Redeemable Equity, and Condensed Consolidated Statements of Cash Flows are not affected by this change in presentation. The effect of the adjustment is as follows: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 (in millions) As Reported As Adjusted As Reported As Adjusted Consolidated Statements of Income: Net sales before shipping and handling costs $ 1,574 $ — $ 4,660 $ — Less: shipping and handling costs 117 — 349 — Net sales 1,457 1,574 4,311 4,660 Cost of sales 1,113 1,230 3,322 3,671 Gross profit $ 344 $ 344 $ 989 $ 989 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 (in millions) As Reported As Adjusted As Reported As Adjusted Net sales to unaffiliated customers: North America $ 892 $ 984 $ 2,637 $ 2,912 South America 234 245 667 699 Asia-Pacific 196 205 585 611 EMEA 135 140 422 438 Total $ 1,457 $ 1,574 $ 4,311 $ 4,660 |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2020 | |
Acquisitions | |
Acquisitions | 3. Acquisitions On July 1, 2020, the Company completed its acquisition of PureCircle Limited (“PureCircle”) through its wholly owned subsidiary Ingredion SRSS Holdings Limited (“Ingredion SRSS”), an unlisted United Kingdom private limited company. PureCircle is one of the leading producers and innovators of stevia sweeteners for global food and beverage industries. To complete the closing, the Company made a total cash payment of $208 million, net of $14 million of cash acquired, which it funded from cash on hand. Upon the closing, PureCircle is wholly owned by Ingredion SRSS, which in turn is 75% -owned by Ingredion and 25% -owned by former PureCircle shareholders. PureCircle is consolidated by Ingredion for financial reporting purposes, with a corresponding redeemable non-controlling interest of $74 million recorded for the portion not owned by the Company. The results of PureCircle will be reported on a one-month lag within the Company’s consolidated financial statements during the integration process of the companies. The results of the acquired operations are included in the Company’s consolidated results from the acquisition date within the Asia-Pacific reportable segment. Pro-forma results of operations for the acquisition have not been presented as the effect of the acquisition would not be material to the Company’s results of operations for any periods presented. 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 transaction are generally recorded at their estimated acquisition date fair values, while transaction costs associated with the acquisition were expensed as incurred. Goodwill represents the amount by which the purchase price exceeds the estimated fair value of the net assets acquired. The goodwill related to PureCircle is not tax-deductible due to the structure of the acquisition. The following table summarizes the preliminary purchase price allocations for the PureCircle acquisition as of September 30, 2020: Preliminary (in millions) PureCircle Working capital (excluding cash) $ 77 Property, plant and equipment 89 Other, net 4 Identifiable intangible assets 64 Goodwill 48 Total purchase price, net of cash $ 282 All of the recorded assets and liabilities, including working capital, property, plant and equipment, goodwill, intangibles and taxes, are open to change as the Company is still in process of performing purchase accounting for PureCircle, pending receipt of certain information required to finalize the determination of fair value. The g oodwill results from synergies and other operational benefits expected to be derived from the acquisition. The identifiable intangible assets for the acquisition of PureCircle include items such as customer relationships, trade names, and proprietary technology. 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. For more information on the fair value hierarchy, see Note 6. On March 1, 2019, the Company completed its acquisition of Western Polymer LLC (“Western Polymer”), a privately-held, U.S.-based company headquartered in Moses Lake, Washington, that produces native and modified potato starches for industrial and food applications for $42 million, net of cash acquired of $4 million. The acquisition expanded the Company's potato starch manufacturing capacity, enhanced its processing capabilities, and broadened its higher-value specialty ingredients business and customer base. The results of the acquired operation are included in the Company’s consolidated results from the acquisition date within the North America business segment. During the three months ended March 31, 2020, the Company finalized the purchase price allocation for the Western Polymer acquisition. The finalization of goodwill and intangible assets did not have a significant impact on previously estimated amounts. The acquisition of Western Polymer added $13 million of goodwill and intangible assets and $29 million of net tangible assets as of the acquisition date. Pro-forma results of operations for the acquisition made in 2019 have not been presented as the effect of the acquisition would not be material to the Company’s results of operations for any periods presented. The Company incurred $5 million and $8 million of pre-tax acquisition and integration costs for the three and nine months ended September 30, 2020, respectively, associated with the PureCircle acquisition. The Company incurred an insignificant amount of pre-tax acquisition and integration costs for the three months ended September 30, 2019 and $2 million of pre-tax acquisition and integration costs for the nine months ended September 30, 2019 associated with the Western Polymer acquisition. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2020 | |
Revenue Recognition | |
Revenue Recognition | 4. Revenue Recognition The Company applies the provisions of ASC 606-10, Revenue from Contracts with Customers The Company identified customer purchase orders, which in some cases are governed by a master sales agreement, as the contracts with its customers. For each contract, the Company considers the transfer of products, each of which is distinct, to be the identified performance obligation. In determining the transaction price for the performance obligation, the Company evaluates whether the price is subject to adjustment to determine the consideration to which the Company expects to be entitled. The pricing model can be fixed or variable within the contract. The variable pricing model is based on historical commodity pricing and is determinable prior to completion of the performance obligation. Additionally, the Company has certain sales adjustments for volume incentive discounts and other discount arrangements that reduce the transaction price. The reduction of the transaction price is estimated using the expected value method based on an analysis of historical volume incentives or discounts, over a period of time considered adequate to account for current pricing and business trends. Historically, actual volume incentives and discounts relative to those estimated and included when determining the transaction price have not materially differed. Volume incentives and discounts are accrued at the satisfaction of the performance obligation and accounted for in Accounts payable and accrued liabilities in the Condensed Consolidated Balance Sheets. These amounts were not significant as of September 30, 2020 or December 31, 2019. The product price as specified in the contract, net of any discounts, is considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar circumstances. Payment is received shortly after the performance obligation is satisfied; therefore, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. Revenue is recognized when the Company’s performance obligation is satisfied and control is transferred to the customer, which occurs at a point in time, either upon delivery to an agreed upon location or to the customer. Further, in determining whether control has transferred, the Company considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer. Shipping and handling activities related to contracts with customers represent fulfillment costs and are recorded in Cost of sales. Taxes assessed by governmental authorities and collected from customers are accounted for on a net basis and excluded from revenues. The Company applies a practical expedient to expense costs to obtain a contract as incurred as most contracts are one year or less. These costs primarily include the Company’s internal sales force compensation. Under the terms of these programs, such costs are generally earned and the costs are recognized at the time the revenue is recognized. From time to time, the Company may enter into long-term contracts with its customers. Historically, the contracts entered into by the Company do not result in significant contract assets or liabilities. Any such arrangements are accounted for in Other assets or Accounts payable and accrued liabilities in the Condensed Consolidated Balance Sheets. There were no significant contract assets or liabilities as of September 30, 2020 or December 31, 2019. 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”). The nature, amount, timing and uncertainty of the Company’s Net sales are managed by the Company primarily based on its geographic segments. Each region’s product sales are unique to each region and have unique risks. Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2020 2019 2020 2019 Net sales to unaffiliated customers: North America $ 928 $ 984 $ 2,739 $ 2,912 South America 224 245 643 699 Asia-Pacific 207 205 583 611 EMEA 143 140 429 438 Total net sales $ 1,502 $ 1,574 $ 4,394 $ 4,660 |
Restructuring and Impairment Ch
Restructuring and Impairment Charges | 9 Months Ended |
Sep. 30, 2020 | |
Restructuring and Impairment Charges | |
Restructuring and Impairment Charges | 5. Restructuring and Impairment Charges For the three and nine months ended September 30, 2020, the Company recorded a total of $16 million and $41 million of pre-tax restructuring and impairment charges, respectively. For the three and nine months ended September 30, 2020, the Company recorded $2 million and $17 million of pre-tax restructuring charges for its Cost Smart cost of sales program, respectively. During the three months ended September 30, 2020, the Company recorded $1 million of other restructuring costs in relation to the closure of the Lane Cove, Australia production facility and $1 million of other costs related to the closure of the Stockton, California production facility. During the nine months ended September 30, 2020, the Company recorded $10 million of restructuring charges in relation to the closure of the Lane Cove, Australia production facility, $6 million related to the closure of the Stockton, California production facility and $1 million of other restructuring costs. The Lane Cove, Australia restructuring costs consist of $6 million of asset write-offs, $3 million of other costs, and $1 million of accelerated depreciation. The Stockton, California restructuring costs consist of $4 million of accelerated depreciation, $1 million of employee-related severance, and $1 million of other costs. The Company expects to incur $1 million to $2 million of additional restructuring costs during the remainder of 2020 related to the Lane Cove production facility closure. Additionally, the Company recorded pre-tax restructuring charges of $4 million and $14 million during the three and nine months ended September 30, 2020, respectively, for its Cost Smart selling, general and administrative expense (“SG&A”) program. During the three months ended September 30, 2020, the Company recorded $4 million of pre-tax restructuring charges, consisting primarily of other costs, including professional services, in North America. During the nine months ended September 30, 2020, the Company recorded pre-tax restructuring costs of $14 million primarily in North America, consisting of $12 million of other costs, including professional services, and $2 million of employee-related severance. Finally, the Company recognized an other-than-temporary impairment of $10 million on its equity method investment in Verdient Foods Inc. during the three months ended September 30, 2020. The other-than-temporary impairment was triggered by the decrease in the fair value of its investment as determined by the agreed upon price for Ingredion to acquire the remaining 80% interest in Verdient Foods Inc. This agreement is more fully described in Note 14, Subsequent Event. For the three and nine months ended September 30, 2019, the Company recorded $28 million and $41 million of pre-tax restructuring charges, respectively. For the three and nine months ended September 30, 2019, the Company recorded $14 million and $23 million, respectively, of other costs, including professional services, and employee-related severance in the North America and South America segments as part of its Cost Smart SG&A program. This included $1 million and $2 million of other costs associated with the Finance Transformation initiative in Latin America for the three and nine months ended September 30, 2019, respectively. Additionally, for the three and nine months ended September 30, 2019, the Company recorded $14 million and $18 million, respectively, of other costs, including professional services, as part of the Cost Smart cost of sales program, including $2 million in relation to the prior year cessation of wet-milling at the Stockton, California plant. A summary of the Company’s employee-related severance accrual as of September 30, 2020 is as follows (in millions): Balance in severance accrual as of December 31, 2019 $ 15 Cost Smart cost of sales and SG&A 3 Payments made to terminated employees (11) Foreign exchange translation (1) Balance in severance accrual as of September 30, 2020 $ 6 Of the $6 million severance accrual as of September 30, 2020, $5 million is expected to be paid in the next 12 months. As of September 30, 2020, the Company identified certain assets within the Stockton, California and Lane Cove, Australia locations that met the held for sale criteria. The Company expects to sell these assets at a fair value equal to or greater than the carrying value as of September 30, 2020, and did not record a gain or loss associated with the reclassification of these assets to held for sale for the nine months ended September 30, 2020. The assets classified as held for sale are reflected in the Condensed Consolidated Balance Sheets as follows: (in millions) September 30, 2020 December 31, 2019 Other assets $ 8 $ — |
Financial Instruments, Derivati
Financial Instruments, Derivatives and Hedging Activities | 9 Months Ended |
Sep. 30, 2020 | |
Financial Instruments, Derivatives and Hedging Activities | |
Financial Instruments, Derivatives and Hedging Activities | 6. Financial Instruments, Derivatives and Hedging Activities The Company is exposed to market risk stemming from changes in commodity prices (primarily 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 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-related futures, options and swap contracts, foreign currency-related forward contracts, interest rate swaps, and treasury locks (“T-Locks”). Commodity price hedging : The Company’s principal use of derivative financial instruments is to manage commodity price risk relating to anticipated purchases of corn and natural gas to be used in the manufacturing process, generally over the next 12 to 24 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. To manage price risk related to corn purchases primarily in North America, the Company uses corn futures and option contracts that trade on regulated commodity exchanges to lock-in corn costs associated with fixed-priced customer sales contracts. The Company also uses over-the-counter natural gas swaps in North America to hedge a portion of its natural gas usage. These derivative financial instruments limit the impact that volatility resulting from fluctuations in market prices will have on corn and natural gas purchases. The Company’s natural gas derivatives and the majority of its corn derivatives have been designated as cash flow hedging instruments. The Company enters into certain corn derivative instruments that are not designated as hedging instruments as defined by ASC 815, Derivatives and Hedging For commodity hedges designated as cash flow hedges, 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 Condensed Consolidated Balance Sheets as part of Accumulated other comprehensive income (“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. Gains and losses from cash flow hedging instruments reclassified from AOCI to earnings are reported as Cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows. As of September 30, 2020, the Company had outstanding futures and option contracts that hedged the forecasted purchase of approximately 64 million bushels of corn. The Company had outstanding swap and option contracts that hedged the forecasted purchase of approximately 29 million mmbtu’s of natural gas at September 30, 2020. Foreign currency hedging Derivatives and Hedging The Company hedges certain assets using foreign currency derivatives not designated as hedging instruments, which had a notional value of $648 million and $621 million as of September 30, 2020 and December 31, 2019, respectively. The Company also hedges certain liabilities using foreign currency derivatives not designated as hedging instruments, which had a notional value of $457 million and $356 million as of September 30, 2020 and December 31, 2019, respectively. The Company hedges certain assets using foreign currency cash flow hedging instruments, which had a notional value of $495 million and $374 million as of September 30, 2020 and December 31, 2019, respectively. The Company also hedges certain liability positions using foreign currency cash flow hedging instruments, which had a notional value of $619 million and $541 million as of September 30, 2020 and December 31, 2019, respectively. Interest rate hedging The Company periodically enters into interest rate swaps to hedge its exposure to interest rate changes. The changes in 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 gains or losses (the changes in fair value) of the hedged debt instruments that are attributable to changes in interest rates (the hedged risk), which are also recognized in earnings. As of September 30, 2020, the Company did not have any outstanding interest rate swaps. As of December 31, 2019, the Company had an outstanding interest rate swap agreement that converted the interest rates on $200 million of its $400 million 4.625% senior notes due November 1, 2020, to variable rates. The Company redeemed these notes in July 2020 and settled the outstanding interest rate swap. The Company periodically enters into T-Locks to hedge its exposure to interest rate changes. 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 Company did not have outstanding T-locks as of September 30, 2020 or December 31, 2019. T-locks outstanding as of March 31, 2020 were settled the three months ended June 30, 2020. The corresponding realized loss was recorded in AOCI and will be amortized to earnings over the life of the senior notes sold. The derivative instruments designated as cash flow hedges included in AOCI as of September 30, 2020 and December 31, 2019 are reflected below: Derivatives in Cash Flow Hedging Relationships Gains (Losses) included in AOCI (in millions) September 30, 2020 December 31, 2019 Commodity contracts, net of income tax effect of $ — and $5, respectively $ 2 $ (11) Foreign currency contracts, net of income tax effect of $1 and $1, respectively (3) 3 Interest rate contracts, net of income tax effect of $1 and $ — , respectively (4) (1) Total $ (5) $ (9) 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 Hedging Instruments as of September 30, 2020 Designated Hedging Instruments (in millions) Non-Designated Hedging Instruments (in millions) Balance Sheet Location Commodity Contracts Foreign Currency Contracts Interest Rate Contracts Total Commodity Contracts Foreign Currency Contracts Interest Rate Contracts Total Accounts receivable, net $ 18 $ — $ — $ 18 $ — $ 7 $ — $ 7 Other assets 4 — — 4 — 3 — 3 Assets 22 — — 22 — 10 — 10 Accounts payable and accrued liabilities 6 1 — 7 1 23 — 24 Non-current liabilities 1 3 — 4 — 2 — 2 Liabilities 7 4 — 11 1 25 — 26 Net (Liabilities)/Assets $ 15 $ (4) $ — $ 11 $ (1) $ (15) $ — $ (16) Fair Value of Hedging Instruments as of December 31, 2019 Designated Hedging Instruments (in millions) Non-Designated Hedging Instruments (in millions) Balance Sheet Location Commodity Contracts Foreign Currency Contracts Interest Rate Contracts Total Commodity Contracts Foreign Currency Contracts Interest Rate Contracts Total Accounts receivable, net $ 5 $ 7 $ — $ 12 $ 2 $ 4 $ — $ 6 Other assets 1 3 1 5 — 1 — 1 Assets 6 10 1 17 2 5 — 7 Accounts payable and accrued liabilities 13 4 — 17 1 8 — 9 Non-current liabilities 4 4 — 8 — 2 — 2 Liabilities 17 8 — 25 1 10 — 11 Net (Liabilities)/Assets $ (11) $ 2 $ 1 $ (8) $ 1 $ (5) $ — $ (4) Line item in the statement of financial position in which the hedged item is included (in millions) Carrying Amount of the Hedged Assets/(Liabilities) Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Assets/(Liabilities) Balance sheet date as of September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019 Interest Rate Contracts: Long-Term Debt $ — $ (201) $ — $ (1) Additional information relating to the Company’s derivative instruments is presented below: Derivatives in Cash Flow Gains (Losses) Recognized Income Gains (Losses) Reclassified Hedging Relationships Three Months Ended September 30, Statement Three Months Ended September 30, (in millions) 2020 2019 Location 2020 2019 Commodity contracts $ 21 $ (20) Cost of sales $ (30) $ 2 Foreign currency contracts (5) 3 Net sales/Cost of sales (1) 1 Interest rate contracts — — Financing costs, net — — Total $ 16 $ (17) $ (31) $ 3 Derivatives in Cash-Flow Gains (Losses) Recognized Income Gains (Losses) Reclassified Hedging Relationships Nine Months Ended September 30, Statement Nine Months Ended September 30, (in millions, pre-tax) 2020 2019 Location 2020 2019 Commodity contracts $ (36) $ (20) Cost of sales $ (54) $ (1) Foreign currency contracts (9) 4 Net sales/Cost of sales (1) (1) Interest rate contracts (5) — Financing costs, net (1) (1) Total $ (50) $ (16) $ (56) $ (3) Derivatives in Fair Value Hedging Income Statement Location of Gains (Losses) Recognized in Income Income Statement Gains (Losses) Recognized in Income Relationships Derivatives Designated as Three Months Ended September 30, Location Three Months Ended September 30, (in millions) Hedging Instruments 2020 2019 of Hedged Items 2020 2019 Interest rate contracts Financing costs, net $ — $ — Financing costs, net $ — $ — Derivatives in Fair Value Income Statement Location of Gains (Losses) Recognized in Income Income Statement Gains (Losses) Recognized in Income Hedging Relationships Derivatives Designated as Nine Months Ended September 30, Location Nine Months Ended September 30, (in millions) Hedging Instruments 2020 2019 of Hedged Items 2020 2019 Interest rate contracts Financing costs, net $ (1) $ 3 Financing costs, net $ 1 $ (3) As of September 30, 2020, AOCI included $3 million of net losses (net of income taxes of $1 million) on settled commodities-related derivatives instruments, T-Locks, and foreign currency hedges designated as cash flow hedges that are expected to be reclassified into earnings during the next 12 months. Fair Value Measurements: As of September 30, 2020 As of December 31, 2019 (in millions) Total Level 1 (a) Level 2 (b) Level 3 (c) Total Level 1 (a) Level 2 (b) Level 3 (c) Available for sale securities $ 10 $ 10 $ — $ — $ 13 $ 13 $ — $ — Derivative assets 32 15 17 — 24 7 17 — Derivative liabilities 37 5 32 — 36 5 31 — Long-term debt 2,106 — 2,106 — 1,751 — 1,751 — (a) Level 1 inputs consist of quoted prices (unadjusted) in active markets for identical assets or liabilities. (b) 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. (c) Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for 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. As of September 30, 2020, the carrying value and fair value of the Company’s Long-term debt was $2.1 billion. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2020 | |
Debt | |
Debt | 7. Debt As of September 30, 2020 and December 31, 2019, the Company’s total debt consisted of the following: As of As of (in millions) September 30, 2020 December 31, 2019 2.900% senior notes due June 1, 2030 $ 594 $ — 3.200% senior notes due October 1, 2026 497 497 3.900% senior notes due June 1, 2050 390 — 6.625% senior notes due April 15, 2037 253 253 4.625% senior notes due November 1, 2020 — 400 5.62% senior notes due March 25, 2020 — 200 Term loan credit agreement due April 12, 2021 380 405 Revolving credit facility — 10 Other long-term borrowings 1 — Fair value adjustment related to hedged fixed rate debt instruments — 1 Long-term debt 2,115 1,766 Short-term borrowings 62 82 Total debt $ 2,177 $ 1,848 During the three months ended March 31, 2020, the Company used proceeds from the revolving credit facility (“Revolving Credit Facility”) to refinance $200 million of its 5.62% senior notes due March 25, 2020. During the three months ended June 30, 2020, the Company sold its (i) 2.900% senior notes due 2030 in the principal amount of $600 million (the “2030 Notes”) and (ii) 3.900% senior notes due 2050 in the principal amount of $400 million (the “2050 Notes” and, together with the “2030 Notes,” the “Notes”). The Company recorded the aggregate discount of approximately $7 million at which the Notes were issued and capitalized debt issuance costs of approximately $9 million associated with the Notes. During the three months ended June 30, 2020, the Company applied the net proceeds from the sale of the Notes to pay in full the outstanding balance of $394 million under the Revolving Credit Facility and set aside funds to repay its 4.625% senior notes due November 1, 2020 (the “November 2020 Notes”). On June 8, 2020, the Company issued a notice for the redemption in full of all $400 million principal amount of the November 2020 Notes. The November 2020 Notes were redeemed on July 9, 2020 for a total redemption price of $409 million, including $4 million of accrued interest and a $5 million “make-whole” premium as set forth in the indenture. The Company’s long-term debt as of September 30, 2020 includes the term loan credit agreement due April 12, 2021, as the Company has the ability and intent to refinance it on a long-term basis using the Revolving Credit Facility or other means prior to the maturity date. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2020 | |
Leases | |
Leases | 8. Leases The Company determines if an arrangement is a lease at inception of the agreement. Operating leases are included in operating lease assets, and current and non-current operating lease liabilities in the Company’s Condensed Consolidated Balance Sheets. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease asset value includes in its calculation any prepaid lease payments made and any lease incentives received from the arrangement as a reduction of the asset. The Company’s lease terms may include options to extend or terminate the lease, and the impact of these options is included in the lease liability and lease asset calculations when the exercise of the option is at the Company’s sole discretion and it is reasonably certain that the Company will exercise that option. The Company will not separate lease and non-lease components for its leases when it is impracticable to separate the two, such as for leases with variable payment arrangements. Leases with an initial term of 12 months or less are not recorded on the balance sheet. The Company has operating leases for certain rail cars, office space, warehouses, and machinery and equipment. The commencement date used for the calculation of the lease obligations recorded is the latter of the commencement date of the new standard (January 1, 2019) or the lease start date. Certain of the leases have options to extend the life of the lease, which are included in the liability calculation when the option is at the sole discretion of the Company and it is reasonably certain that the Company will exercise the option. The Company has certain leases that have variable payments based solely on output or usage of the leased asset. These variable operating lease assets are excluded from the Company’s balance sheet presentation and expensed as incurred. The Company currently has no finance leases. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The components of lease expense were as follows: Three Months Ended Nine Months Ended Lease Cost September 30, September 30, (in millions) 2020 2019 2020 2019 Operating lease cost $ 14 $ 13 $ 40 $ 40 Variable operating lease cost 8 6 23 18 Short term lease cost 1 1 3 2 Lease cost $ 23 $ 20 $ 66 $ 60 The following is a reconciliation of future undiscounted cash flows to the operating lease liabilities and the related operating lease assets as presented on the Condensed Consolidated Balance Sheet as of September 30, 2020. Operating Leases As of (in millions) September 30, 2020 2020 (Excluding the nine months ended September 30, 2020) $ 14 2021 49 2022 40 2023 31 2024 21 Thereafter 37 Total future lease payments 192 Less imputed interest 23 Present value of future lease payments 169 Less current lease liabilities 46 Non-current operating lease liabilities $ 123 Operating lease assets $ 161 Additional information related to the Company’s operating leases is listed below. Three Months Ended Nine Months Ended Other Information September 30, September 30, ($ in millions) 2020 2019 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 14 $ 12 $ 40 $ 41 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 24 $ 11 $ 45 $ 178 As of As of September 30, 2020 December 31, 2019 Weighted average remaining lease term: Operating leases 5.0 years 5.5 years Weighted average discount rate: Operating leases 5.1 % 5.7 % |
Taxes
Taxes | 9 Months Ended |
Sep. 30, 2020 | |
Taxes | |
Taxes | 9. Taxes The Company’s effective tax rate for the three months ended September 30, 2020 increased to 30.1 percent from 27.1 percent during the three months ended September 30, 2019. The increase in the effective income tax rate was driven by one-time items in the quarter over quarter results, a change in the mix of earnings including the consolidation of PureCircle and a valuation allowance on U.S. foreign tax credits. These items were partially offset by a reduction in the Company’s U.S. global intangible low-taxed income (“GILTI”) based on the newly issued final U.S. Treasury regulations relating thereto, an increase in the valuation of the Mexican peso against the U.S. dollar and utilization of net operating losses for which a benefit had not been previously recognized compared to a valuation allowance recorded for the three months ended September 30, 2019. The effective tax rate for the nine months ended September 30, 2020 was 34.4 percent compared to 27.8 percent during the nine months ended September 30, 2019. The increase in the effective tax rate was driven by a decrease in the valuation of the Mexican peso against the U.S. dollar, one-time items in the quarter over quarter results, a change in the mix of earnings including the consolidation of PureCircle and a valuation allowance on U.S. foreign tax credits. These items were partially offset by a reduction in the Company’s GILTI based on the newly issued final U.S. Treasury regulations relating thereto and utilization of net operating losses for which a benefit had not previously been recognized compared to a valuation allowance recorded for the three months ended September 30, 2019. |
Net Periodic Pension and Postre
Net Periodic Pension and Postretirement Benefit Costs | 9 Months Ended |
Sep. 30, 2020 | |
Net Periodic Pension and Postretirement Benefit Costs | |
Net Periodic Pension and Postretirement Benefit Costs | 10. Net Periodic Pension and Postretirement Benefit Costs The following table sets forth the components of net periodic benefit cost of the U.S. and non-U.S. defined benefit pension plans for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans (in millions) 2020 2019 2020 2019 2020 2019 2020 2019 Service cost $ 2 $ 2 $ 1 $ — $ 4 $ 4 $ 3 $ 2 Interest cost 2 4 2 3 8 11 8 8 Expected return on plan assets (5) (5) (2) (2) (16) (14) (6) (6) Amortization of actuarial loss — — 1 — — — 2 1 Net periodic benefit cost (a) $ (1) $ 1 $ 2 $ 1 $ (4) $ 1 $ 7 $ 5 The Company currently anticipates that it will make approximately $4 million in cash contributions to its pension plans in 2020, consisting of contributions of $3 million to its non-U.S. pension plans and $1 million to its U.S. pension plans. For the nine months ended September 30, 2020, The following table sets forth the components of net postretirement benefit cost for the periods presented: Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2020 2019 2020 2019 Service cost $ — $ — $ — $ — Interest cost — 1 2 2 Amortization of prior service credit — — (1) (1) Net periodic benefit cost (a) $ — $ 1 $ 1 $ 1 (a) The service cost component of net periodic benefit cost is presented within either cost of sales or operating expenses on the Condensed Consolidated Statements of Income. The interest cost, expected return on plan assets, amortization of prior service credit, and amortization of actuarial loss components of net periodic benefit cost are presented as other, non-operating income on the Condensed Consolidated Statements of Income. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2020 | |
Inventories | |
Inventories | 11. Inventories Inventories are summarized as follows: As of As of (in millions) September 30, 2020 December 31, 2019 Finished and in process $ 593 $ 565 Raw materials 221 237 Manufacturing supplies and other 94 59 Total inventories $ 908 $ 861 |
Equity
Equity | 9 Months Ended |
Sep. 30, 2020 | |
Equity | |
Equity | 12. Equity Treasury stock On November 5, 2018, the Company entered into a Variable Timing Accelerated Share Repurchase (“ASR”) program with JPMorgan (“JPM”). Under the ASR program, the Company paid $455 million on November 5, 2018, and acquired 4 million shares of its common stock having an approximate value of $423 million on that date. On February 5, 2019, the Company and JPM settled the difference between the initial price and average daily volume weighted average price (“VWAP”) less the agreed upon discount during the term of the ASR agreement. The final VWAP was $98.04 per share, which was less than originally paid. The Company settled the difference in cash, resulting in JPM returning $63 million of the upfront payment to the Company on February 6, 2019, and lowering the total cost of repurchasing the 4 million shares of common stock to $392 million. The Company adjusted Additional paid-in capital and Treasury stock by $32 million and $31 million, respectively, during the nine months ended September 30, 2019 for this inflow of cash. In the three and nine months ended September 30, 2020, the Company did not repurchase shares of common stock. Share-based payments: Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2020 2019 2020 2019 Stock options: Pre-tax compensation expense $ 1 $ — $ 3 $ 2 Income tax benefit — — — — Stock option expense, net of income taxes 1 — 3 2 Restricted stock units ("RSUs"): Pre-tax compensation expense 3 2 9 7 Income tax benefit — — (1) (1) RSUs, net of income taxes 3 2 8 6 Performance shares and other share-based awards: Pre-tax compensation expense 2 2 6 5 Income tax benefit (1) — (1) — Performance shares and other share-based compensation expense, net of income taxes 1 2 5 5 Total share-based compensation: Pre-tax compensation expense 6 4 18 14 Income tax benefit (1) — (2) (1) Total share-based compensation expense, net of income taxes $ 5 $ 4 $ 16 $ 13 Stock Options: Under the Company’s stock incentive plan, stock options are granted at exercise prices that equal the market value of the underlying common stock on the date of grant. The options have a 10 -year term and are exercisable upon vesting, which occurs 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 throughout the vesting period of the stock options within the amount of compensation costs recognized in each period. The Company granted non-qualified options to purchase 336 thousand shares and 247 thousand shares for the nine months ended September 30, 2020 and 2019, respectively. The fair value of each option grant was estimated using the Black-Scholes option-pricing model with the following assumptions at the date of grant: Nine Months Ended September 30, 2020 2019 Expected life (in years) 5.5 5.5 Risk-free interest rate 1.4 % 2.5 % Expected volatility 19.8 % 19.7 % Expected dividend yield 2.9 % 2.7 % 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 U.S. Treasury yield curve in effect at the grant date for the period corresponding to the expected life of the options. Expected volatility is based on historical volatilities of the Company’s common stock. Dividend yield is based on current dividend payments at the date of grant. Stock option activity for the nine months ended September 30, 2020 was as follows: Number of Options (in thousands) Weighted Average Exercise Price per Share Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of December 31, 2019 2,055 $ 84.36 5.30 $ 34 Granted 336 88.35 Exercised (93) 45.12 Cancelled (19) 85.75 Outstanding as of September 30, 2020 2,279 $ 86.55 5.37 $ 12 Exercisable as of September 30, 2020 1,740 $ 84.09 4.33 $ 12 For the nine months ended September 30, 2020 , cash received from the exercise of stock options was $5 million. As of September 30, 2020, the unrecognized compensation cost related to non-vested stock options totaled $3 million, which is expected to be amortized over the weighted-average period of approximately 1.5 years. Additional information pertaining to stock option activity is as follows: Three Months Ended Nine Months Ended September 30, September 30, (dollars in millions, except per share) 2020 2019 2020 2019 Weighted average grant date fair value of stock options granted (per share) $ — $ — $ 11.48 $ 14.02 Total intrinsic value of stock options exercised $ — $ 1 $ 4 $ 7 Restricted Stock Units: The Company has granted restricted stock units (“RSUs”) to certain key employees. The RSUs 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 throughout the vesting period of the RSUs 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 market price of the Company’s common stock on the date of the grant. The following table summarizes RSU activity for the nine months ended September 30, 2020: (RSUs in thousands) Number of Restricted Shares Weighted Average Fair Value per Share Non-vested as of December 31, 2019 339 $ 108.02 Granted 178 88.10 Vested (92) 117.18 Cancelled (14) 102.71 Non-vested as of September 30, 2020 411 $ 97.52 As of September 30, 2020, the total remaining unrecognized compensation cost related to RSUs was $18 million, which will be amortized over a weighted average period of approximately 1.8 years. Performance Shares: The Company has a long-term incentive plan for senior management in the form of performance shares . Historically these performance shares vested based solely on the Company’s total shareholder return as compared to the total shareholder return of its peer group over the three-year vesting period. Beginning with the 2019 performance share grants, the vesting of the performance shares is based on two performance metrics. Fifty percent of the performance shares awarded will vest based on the Company’s total shareholder return as compared to the total shareholder return of its peer group, and the remaining fifty percent will vest based on the calculation of the Company’s three-year average Return on Invested Capital (“ROIC”) against an established ROIC target. For the 2020 performance shares awarded based on the Company’s total shareholder return, the number of shares that ultimately vest can range from zero to 200 percent of the awarded grant depending on the Company’s total shareholder return as compared to the total shareholder return of its peer group. The share award vesting will be calculated at the end of the three-year period and is subject to approval by management and the Compensation Committee of the Board of Directors. 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 2020 performance shares awarded based on ROIC, the number of shares that ultimately vest can range from zero to 200 percent of the awarded grant depending on the Company’s ROIC performance against the target. The share award vesting will be calculated at the end of the three-year period and is subject to approval by management and the Compensation Committee. Compensation expense is based on the market price of the Company’s common stock on the date of the grant and the final number of shares that ultimately vest. The Company will estimate the potential share vesting at least annually to adjust the compensation expense for these awards over the vesting period to reflect the Company’s estimated ROIC performance versus the target. The total compensation expense for these awards is amortized over a three-year graded vesting schedule. For the nine months ended September 30, 2020, the Company awarded 81 thousand performance shares at a weighted average fair value of $94.48 per share. As of September 30, 2020 , the unrecognized compensation cost related to these awards was $6 million, which will be amortized over the remaining requisite service period of 1.9 years. The 2017 performance share awards vested during the nine months ended September 30, 2020, achieving a zero percent payout of the granted performance shares. Additionally, there were 3 thousand performance share cancellations during the nine months ended September 30, 2020. Accumulated Other Comprehensive Loss: The following is a summary of net changes in Accumulated other comprehensive loss by component and net of tax for the nine months ended September 30, 2020 and 2019: (in millions) Cumulative Translation Adjustment Hedging Activities Pension and Postretirement Adjustment Accumulated Other Comprehensive Loss Balance, December 31, 2019 $ (1,089) $ (9) $ (60) $ (1,158) Other comprehensive (loss) before reclassification adjustments (105) (50) — (155) Loss reclassified from accumulated OCI — 56 — 56 Tax (provision) — (2) — (2) Net other comprehensive (loss) income (105) 4 — (101) Balance, September 30, 2020 $ (1,194) $ (5) $ (60) $ (1,259) (in millions) Cumulative Translation Adjustment Hedging Activities Pension and Postretirement Adjustment Accumulated Other Comprehensive Loss Balance, December 31, 2018 $ (1,080) $ (5) $ (69) $ (1,154) Other comprehensive (loss) before reclassification adjustments (48) (16) (2) (66) Loss reclassified from accumulated OCI — 3 — 3 Tax benefit — 3 — 3 Net other comprehensive loss (48) (10) (2) (60) Balance, September 30, 2019 $ (1,128) $ (15) $ (71) $ (1,214) Supplemental Information : The following Condensed Consolidated Statements of Equity and Redeemable Equity provide the dividends per share for common stock for the periods presented: Total Equity Non- Accumulated Redeemable Share-based Redeemable Additional Other Non- Payments Non- Preferred Common Paid-In Treasury Comprehensive Retained Controlling Subject to Controlling (in millions) Stock Stock Capital Stock Loss Earnings Interests Redemption Interests Balance, December 31, 2019 $ — $ 1 $ 1,137 $ (1,040) $ (1,158) $ 3,780 $ 21 $ 31 $ — Net income attributable to Ingredion 75 Net income attributable to non-controlling interests 3 Dividends declared, common stock ($0.63/share) (42) Share-based compensation, net of issuance 5 12 (8) Other comprehensive loss (164) (3) Balance, March 31, 2020 $ — $ 1 $ 1,142 $ (1,028) $ (1,322) $ 3,813 $ 21 $ 23 $ — Net income attributable to Ingredion 66 Net income attributable to non-controlling interests 1 Dividends declared, common stock ($0.63/share) (43) Dividends declared, non-controlling interests (3) Share-based compensation, net of issuance 1 1 4 Other comprehensive income 15 1 Balance, June 30, 2020 $ — $ 1 $ 1,143 $ (1,027) $ (1,307) $ 3,836 $ 20 $ 27 $ — Net income attributable to Ingredion 92 Net income attributable to non-controlling interests 3 (2) Dividends declared, common stock ($0.64/share) (44) Dividends declared, non-controlling interests (2) Acquisition of redeemable non-controlling interests 74 Share-based compensation, net of issuance 2 5 Other comprehensive (loss) income 48 2 Balance, September 30, 2020 $ — $ 1 $ 1,145 $ (1,027) $ (1,259) $ 3,884 $ 21 $ 32 $ 74 Total Equity Non- Accumulated Redeemable Share-based Redeemable Additional Other Non- Payments Non- Preferred Common Paid-In Treasury Comprehensive Retained Controlling Subject to Controlling (in millions) Stock Stock Capital Stock Loss Earnings Interests Redemption Interests Balance, December 31, 2018 $ — $ 1 $ 1,096 $ (1,091) $ (1,154) $ 3,536 $ 20 $ 37 $ — Net income attributable to Ingredion 100 Net income attributable to non-controlling interests 2 Dividends declared, common stock ($0.625/share) (42) Repurchases of common stock 32 31 Share-based compensation, net of issuance 9 10 (16) Other comprehensive loss (6) Balance, March 31, 2019 $ — $ 1 $ 1,137 $ (1,050) $ (1,160) $ 3,594 $ 22 $ 21 $ — Net income attributable to Ingredion 105 Net income attributable to non-controlling interests 2 Dividends declared, common stock ($0.625/share) (43) Dividends declared, non-controlling interests (4) Share-based compensation, net of issuance 1 3 4 Other comprehensive income (loss) 8 (4) Balance, June 30, 2019 $ — $ 1 $ 1,138 $ (1,047) $ (1,152) $ 3,656 $ 16 $ 25 $ — Net income attributable to Ingredion 99 Net income attributable to non-controlling interests 3 Dividends declared, common stock ($0.63/share) (42) Dividends declared, non-controlling interests (2) Repurchases of common stock Share-based compensation, net of issuance (1) 3 3 Other comprehensive (loss) income (62) 2 Balance, September 30, 2019 $ — $ 1 $ 1,137 $ (1,044) $ (1,214) $ 3,713 $ 19 $ 28 $ — Supplemental Information: Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 (in millions, except per share amounts) Net Income Available to Ingredion Weighted Average Shares Per Share Amount Net Income Available to Ingredion Weighted Average Shares Per Share Amount Basic EPS $ 92 67.2 $ 1.37 $ 99 66.9 $ 1.48 Effect of Dilutive Securities: Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards 0.4 0.5 Diluted EPS $ 92 67.6 $ 1.36 $ 99 67.4 $ 1.47 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 (in millions, except per share amounts) Net Income Available to Ingredion Weighted Average Shares Per Share Amount Net Income Available to Ingredion Weighted Average Shares Per Share Amount Basic EPS $ 233 67.2 $ 3.47 $ 304 66.9 $ 4.54 Effect of Dilutive Securities: Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards 0.4 0.5 Diluted EPS $ 233 67.6 $ 3.45 $ 304 67.4 $ 4.51 For the three and nine months ended September 30, 2020 approximately 1.7 million and 1.4 million share-based awards of common stock, respectively, were excluded from the calculation of diluted EPS as the impact of their inclusion would have been anti-dilutive. For the three and nine months ended September 30, 2019 approximately 1.4 million and 1.1 million share-based awards of common stock, respectively, were excluded from the calculation of diluted EPS as the impact of their inclusion would have been anti-dilutive. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2020 | |
Segment Information | |
Segment Information | 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 EMEA. Its North America segment includes businesses in the U.S., Mexico, and Canada. The Company’s South America segment includes businesses in Brazil, Colombia, Ecuador, and the Southern Cone of South America, which includes Argentina, Peru, Chile, and Uruguay. Its Asia-Pacific segment includes businesses in South Korea, Thailand, China, Australia, Japan, Indonesia, Singapore, the Philippines, India, Malaysia, New Zealand, and Vietnam. The Company’s EMEA segment includes businesses in Pakistan, Germany, the United Kingdom, South Africa, and Kenya. The Company has aggregated the PureCircle operating segment into the Asia-Pacific reportable segment. Net sales by product are not presented because to do so would be impracticable. Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2020 2019 2020 2019 Net sales to unaffiliated customers: North America $ 928 $ 984 $ 2,739 $ 2,912 South America 224 245 643 699 Asia-Pacific 207 205 583 611 EMEA 143 140 429 438 Total net sales $ 1,502 $ 1,574 $ 4,394 $ 4,660 Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2020 2019 2020 2019 Operating income: North America $ 132 $ 145 $ 358 $ 409 South America 29 27 68 61 Asia-Pacific 18 22 60 65 EMEA 25 24 73 71 Corporate (25) (25) (86) (69) Subtotal 179 193 473 537 Restructuring/impairment charges (16) (28) (41) (41) Acquisition/integration costs (5) — (8) (2) Charge for fair value markup of acquired inventory (3) — (3) — North America storm damage (2) — (2) — Total operating income $ 153 $ 165 $ 419 $ 494 As of As of (in millions) September 30, 2020 December 31, 2019 Assets: North America (a) $ 4,072 $ 3,924 South America 676 774 Asia-Pacific 1,193 843 EMEA 523 499 Total assets $ 6,464 $ 6,040 (a) For purposes of presentation, North America includes Corporate assets. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2020 | |
Subsequent Events | |
Subsequent Events | 14. Subsequent Event In 2018, the Company entered into an equity method investment with Verdient Foods, Inc. (“Verdient”) by acquiring 20% of its outstanding shares. Verdient is a Canada-based producer of pulse-based protein concentrates and flours from peas, lentils and fava beans for human food applications. On November 3, 2020, the Company acquired the remaining 80% of the outstanding shares of Verdient not owned by the Company. To complete the closing, the Company made a total cash payment of CAD $33 million, which it funded from cash on hand. |
Summary of Significant Accoun_2
Summary of Significant Accounting Standards and Policies (Policies) | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Recently Adopted Accounting Standards and New Accounting Standards | Recently Adopted Accounting Standards ASU No. 2017-04, Intangibles – Goodwill and Other (Topic 350) In January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-04, Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment . This ASU simplifies the subsequent measurement of goodwill as this ASU eliminates Step 2 from the goodwill impairment test. Under this ASU, an entity will continue to perform its annual, or interim, goodwill impairment test to determine if the fair value of a reporting unit is greater than its carrying amount. An entity should then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value using the results of its Step 1 assessment, with the loss recognized not to exceed the total amount of goodwill allocated to that reporting unit. This ASU is effective for annual periods beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2017-04 at the beginning of its 2020 fiscal year, and this ASU did not have a material impact on the Company’s Condensed Consolidated Financial Statements upon adoption. ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326) In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments , which requires the Company to measure and recognize expected credit losses for financial assets held and not accounted for at fair value through net income. This ASU is effective for annual periods beginning after December 15, 2019, with early adoption permitted. The Company adopted ASU 2016-13 at the beginning of its 2020 fiscal year, and this ASU did not have a material impact on the Company’s Condensed Consolidated Financial Statements upon adoption. |
Indefinite-lived intangible assets and Goodwill | Indefinite-lived intangible assets and goodwill: (in millions) Balance at September 30, 2020 Balance at December 31, 2019 Trademarks/tradenames (indefinite-lived) $ 178 $ 178 The original carrying value of goodwill and accumulated impairment charges by reportable business segment at September 30, 2020 was as follows: North South Asia- (in millions) America America Pacific EMEA Total Goodwill before impairment charges $ 608 $ 54 $ 229 $ 65 $ 956 Accumulated impairment charges (1) (33) (121) — (155) Balance at January 1, 2020 607 21 108 65 801 Acquisitions — — 48 — 48 Currency translation — (6) (3) 1 (8) Balance at September 30, 2020 $ 607 $ 15 $ 153 $ 66 $ 841 The Company assesses indefinite-lived intangible assets and goodwill for impairment annually (or more frequently if impairment indicators arise). The Company performs this annual impairment assessment as of July 1 each year. 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 less than its carrying value. After assessing the qualitative factors, if the Company determines that it is more-likely-than-not that the fair value of an indefinite-lived intangible asset is greater 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 assets and perform a quantitative impairment test in accordance with Accounting Standards Codification (“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 its assessment, the Company concluded that as of July 1, 2020, there were no impairments in its indefinite-lived intangible assets. 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 more-likely-than-not that the fair value of a reporting unit is greater than its carrying amount, then the Company does not perform an impairment test. If the Company concludes otherwise, then it performs an impairment test as described in ASC subtopic 350-30. This test compares the fair value of the reporting unit 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, an impairment is recorded. Based on the results of the annual assessment, the Company concluded that as of July 1, 2020, there were no impairments in its reporting units. |
Net Sales Presentation Change | Net Sales Presentation Change During the three months ended December 31, 2019, the Company changed its presentation of shipping and handling costs. These expenses were previously included as a reduction to Net sales in the Condensed Consolidated Statements of Income. The Company is now presenting these expenses within Cost of sales in the Condensed Consolidated Statements of Income. The change in presentation was applied retrospectively to all periods presented in the Condensed Consolidated Statements of Income. The change in presentation had no effect on Gross profit, Operating income, Net income, or Earnings per share. The Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Statements of Equity and Redeemable Equity, and Condensed Consolidated Statements of Cash Flows are not affected by this change in presentation. The effect of the adjustment is as follows: Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 (in millions) As Reported As Adjusted As Reported As Adjusted Consolidated Statements of Income: Net sales before shipping and handling costs $ 1,574 $ — $ 4,660 $ — Less: shipping and handling costs 117 — 349 — Net sales 1,457 1,574 4,311 4,660 Cost of sales 1,113 1,230 3,322 3,671 Gross profit $ 344 $ 344 $ 989 $ 989 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 (in millions) As Reported As Adjusted As Reported As Adjusted Net sales to unaffiliated customers: North America $ 892 $ 984 $ 2,637 $ 2,912 South America 234 245 667 699 Asia-Pacific 196 205 585 611 EMEA 135 140 422 438 Total $ 1,457 $ 1,574 $ 4,311 $ 4,660 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Summary of Significant Accounting Policies | |
Schedule of indefinite-lived intangible assets | (in millions) Balance at September 30, 2020 Balance at December 31, 2019 Trademarks/tradenames (indefinite-lived) $ 178 $ 178 |
Schedule of goodwill | North South Asia- (in millions) America America Pacific EMEA Total Goodwill before impairment charges $ 608 $ 54 $ 229 $ 65 $ 956 Accumulated impairment charges (1) (33) (121) — (155) Balance at January 1, 2020 607 21 108 65 801 Acquisitions — — 48 — 48 Currency translation — (6) (3) 1 (8) Balance at September 30, 2020 $ 607 $ 15 $ 153 $ 66 $ 841 |
Schedule of change in presentation of shipping and handling costs | Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 (in millions) As Reported As Adjusted As Reported As Adjusted Consolidated Statements of Income: Net sales before shipping and handling costs $ 1,574 $ — $ 4,660 $ — Less: shipping and handling costs 117 — 349 — Net sales 1,457 1,574 4,311 4,660 Cost of sales 1,113 1,230 3,322 3,671 Gross profit $ 344 $ 344 $ 989 $ 989 Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 (in millions) As Reported As Adjusted As Reported As Adjusted Net sales to unaffiliated customers: North America $ 892 $ 984 $ 2,637 $ 2,912 South America 234 245 667 699 Asia-Pacific 196 205 585 611 EMEA 135 140 422 438 Total $ 1,457 $ 1,574 $ 4,311 $ 4,660 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Acquisitions | |
Summarizes the preliminary purchase price allocations for the PureCircle acquisition | Preliminary (in millions) PureCircle Working capital (excluding cash) $ 77 Property, plant and equipment 89 Other, net 4 Identifiable intangible assets 64 Goodwill 48 Total purchase price, net of cash $ 282 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Revenue Recognition | |
Schedule of disaggregation of net sales | Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2020 2019 2020 2019 Net sales to unaffiliated customers: North America $ 928 $ 984 $ 2,739 $ 2,912 South America 224 245 643 699 Asia-Pacific 207 205 583 611 EMEA 143 140 429 438 Total net sales $ 1,502 $ 1,574 $ 4,394 $ 4,660 |
Restructuring and Impairment _2
Restructuring and Impairment Charges (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Restructuring and Impairment Charges | |
Summary of restructuring/impairment charges | A summary of the Company’s employee-related severance accrual as of September 30, 2020 is as follows (in millions): Balance in severance accrual as of December 31, 2019 $ 15 Cost Smart cost of sales and SG&A 3 Payments made to terminated employees (11) Foreign exchange translation (1) Balance in severance accrual as of September 30, 2020 $ 6 |
Summary of assets classified as held for sale reflected in balance sheet | (in millions) September 30, 2020 December 31, 2019 Other assets $ 8 $ — |
Financial Instruments, Deriva_2
Financial Instruments, Derivatives and Hedging Activities (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Financial Instruments, Derivatives and Hedging Activities | |
Schedule of cash flow hedges included in AOCI | Derivatives in Cash Flow Hedging Relationships Gains (Losses) included in AOCI (in millions) September 30, 2020 December 31, 2019 Commodity contracts, net of income tax effect of $ — and $5, respectively $ 2 $ (11) Foreign currency contracts, net of income tax effect of $1 and $1, respectively (3) 3 Interest rate contracts, net of income tax effect of $1 and $ — , respectively (4) (1) Total $ (5) $ (9) |
Schedule of location and amount of assets and liabilities reported in balance sheet | Fair Value of Hedging Instruments as of September 30, 2020 Designated Hedging Instruments (in millions) Non-Designated Hedging Instruments (in millions) Balance Sheet Location Commodity Contracts Foreign Currency Contracts Interest Rate Contracts Total Commodity Contracts Foreign Currency Contracts Interest Rate Contracts Total Accounts receivable, net $ 18 $ — $ — $ 18 $ — $ 7 $ — $ 7 Other assets 4 — — 4 — 3 — 3 Assets 22 — — 22 — 10 — 10 Accounts payable and accrued liabilities 6 1 — 7 1 23 — 24 Non-current liabilities 1 3 — 4 — 2 — 2 Liabilities 7 4 — 11 1 25 — 26 Net (Liabilities)/Assets $ 15 $ (4) $ — $ 11 $ (1) $ (15) $ — $ (16) Fair Value of Hedging Instruments as of December 31, 2019 Designated Hedging Instruments (in millions) Non-Designated Hedging Instruments (in millions) Balance Sheet Location Commodity Contracts Foreign Currency Contracts Interest Rate Contracts Total Commodity Contracts Foreign Currency Contracts Interest Rate Contracts Total Accounts receivable, net $ 5 $ 7 $ — $ 12 $ 2 $ 4 $ — $ 6 Other assets 1 3 1 5 — 1 — 1 Assets 6 10 1 17 2 5 — 7 Accounts payable and accrued liabilities 13 4 — 17 1 8 — 9 Non-current liabilities 4 4 — 8 — 2 — 2 Liabilities 17 8 — 25 1 10 — 11 Net (Liabilities)/Assets $ (11) $ 2 $ 1 $ (8) $ 1 $ (5) $ — $ (4) |
Schedule of fair value hedges | Line item in the statement of financial position in which the hedged item is included (in millions) Carrying Amount of the Hedged Assets/(Liabilities) Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Assets/(Liabilities) Balance sheet date as of September 30, 2020 December 31, 2019 September 30, 2020 December 31, 2019 Interest Rate Contracts: Long-Term Debt $ — $ (201) $ — $ (1) |
Schedule of amount of gains and losses recognized in OCI and location and income statement location | Derivatives in Cash Flow Gains (Losses) Recognized Income Gains (Losses) Reclassified Hedging Relationships Three Months Ended September 30, Statement Three Months Ended September 30, (in millions) 2020 2019 Location 2020 2019 Commodity contracts $ 21 $ (20) Cost of sales $ (30) $ 2 Foreign currency contracts (5) 3 Net sales/Cost of sales (1) 1 Interest rate contracts — — Financing costs, net — — Total $ 16 $ (17) $ (31) $ 3 Derivatives in Cash-Flow Gains (Losses) Recognized Income Gains (Losses) Reclassified Hedging Relationships Nine Months Ended September 30, Statement Nine Months Ended September 30, (in millions, pre-tax) 2020 2019 Location 2020 2019 Commodity contracts $ (36) $ (20) Cost of sales $ (54) $ (1) Foreign currency contracts (9) 4 Net sales/Cost of sales (1) (1) Interest rate contracts (5) — Financing costs, net (1) (1) Total $ (50) $ (16) $ (56) $ (3) |
Schedule of location and amount of gain (loss) recognized in income | Derivatives in Fair Value Hedging Income Statement Location of Gains (Losses) Recognized in Income Income Statement Gains (Losses) Recognized in Income Relationships Derivatives Designated as Three Months Ended September 30, Location Three Months Ended September 30, (in millions) Hedging Instruments 2020 2019 of Hedged Items 2020 2019 Interest rate contracts Financing costs, net $ — $ — Financing costs, net $ — $ — Derivatives in Fair Value Income Statement Location of Gains (Losses) Recognized in Income Income Statement Gains (Losses) Recognized in Income Hedging Relationships Derivatives Designated as Nine Months Ended September 30, Location Nine Months Ended September 30, (in millions) Hedging Instruments 2020 2019 of Hedged Items 2020 2019 Interest rate contracts Financing costs, net $ (1) $ 3 Financing costs, net $ 1 $ (3) |
Schedule of fair value of financial instruments and derivatives | As of September 30, 2020 As of December 31, 2019 (in millions) Total Level 1 (a) Level 2 (b) Level 3 (c) Total Level 1 (a) Level 2 (b) Level 3 (c) Available for sale securities $ 10 $ 10 $ — $ — $ 13 $ 13 $ — $ — Derivative assets 32 15 17 — 24 7 17 — Derivative liabilities 37 5 32 — 36 5 31 — Long-term debt 2,106 — 2,106 — 1,751 — 1,751 — (a) Level 1 inputs consist of quoted prices (unadjusted) in active markets for identical assets or liabilities. (b) 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. (c) Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Debt | |
Schedule of debt | As of As of (in millions) September 30, 2020 December 31, 2019 2.900% senior notes due June 1, 2030 $ 594 $ — 3.200% senior notes due October 1, 2026 497 497 3.900% senior notes due June 1, 2050 390 — 6.625% senior notes due April 15, 2037 253 253 4.625% senior notes due November 1, 2020 — 400 5.62% senior notes due March 25, 2020 — 200 Term loan credit agreement due April 12, 2021 380 405 Revolving credit facility — 10 Other long-term borrowings 1 — Fair value adjustment related to hedged fixed rate debt instruments — 1 Long-term debt 2,115 1,766 Short-term borrowings 62 82 Total debt $ 2,177 $ 1,848 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Leases | |
Summary of components of lease expense | Three Months Ended Nine Months Ended Lease Cost September 30, September 30, (in millions) 2020 2019 2020 2019 Operating lease cost $ 14 $ 13 $ 40 $ 40 Variable operating lease cost 8 6 23 18 Short term lease cost 1 1 3 2 Lease cost $ 23 $ 20 $ 66 $ 60 |
Reconciliation of future undiscounted cash flows to the operating lease liabilities and the related ROU assets | Operating Leases As of (in millions) September 30, 2020 2020 (Excluding the nine months ended September 30, 2020) $ 14 2021 49 2022 40 2023 31 2024 21 Thereafter 37 Total future lease payments 192 Less imputed interest 23 Present value of future lease payments 169 Less current lease liabilities 46 Non-current operating lease liabilities $ 123 Operating lease assets $ 161 |
Summary of other lease information | Three Months Ended Nine Months Ended Other Information September 30, September 30, ($ in millions) 2020 2019 2020 2019 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ 14 $ 12 $ 40 $ 41 Right-of-use assets obtained in exchange for lease liabilities: Operating leases $ 24 $ 11 $ 45 $ 178 As of As of September 30, 2020 December 31, 2019 Weighted average remaining lease term: Operating leases 5.0 years 5.5 years Weighted average discount rate: Operating leases 5.1 % 5.7 % |
Net Periodic Pension and Post_2
Net Periodic Pension and Postretirement Benefit Costs (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Pension Plan | |
Pension and postretirement benefit plans | |
Components of net periodic benefit cost | Three Months Ended September 30, Nine Months Ended September 30, U.S. Plans Non-U.S. Plans U.S. Plans Non-U.S. Plans (in millions) 2020 2019 2020 2019 2020 2019 2020 2019 Service cost $ 2 $ 2 $ 1 $ — $ 4 $ 4 $ 3 $ 2 Interest cost 2 4 2 3 8 11 8 8 Expected return on plan assets (5) (5) (2) (2) (16) (14) (6) (6) Amortization of actuarial loss — — 1 — — — 2 1 Net periodic benefit cost (a) $ (1) $ 1 $ 2 $ 1 $ (4) $ 1 $ 7 $ 5 |
Postemployment Retirement Benefits | |
Pension and postretirement benefit plans | |
Components of net periodic benefit cost | Three Months Ended September 30, Nine Months Ended September 30, (in millions) 2020 2019 2020 2019 Service cost $ — $ — $ — $ — Interest cost — 1 2 2 Amortization of prior service credit — — (1) (1) Net periodic benefit cost (a) $ — $ 1 $ 1 $ 1 (a) The service cost component of net periodic benefit cost is presented within either cost of sales or operating expenses on the Condensed Consolidated Statements of Income. The interest cost, expected return on plan assets, amortization of prior service credit, and amortization of actuarial loss components of net periodic benefit cost are presented as other, non-operating income on the Condensed Consolidated Statements of Income. |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Inventories | |
Components of inventories | As of As of (in millions) September 30, 2020 December 31, 2019 Finished and in process $ 593 $ 565 Raw materials 221 237 Manufacturing supplies and other 94 59 Total inventories $ 908 $ 861 |
Equity (Tables)
Equity (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Equity | |
Schedule of stock based compensation expense | Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2020 2019 2020 2019 Stock options: Pre-tax compensation expense $ 1 $ — $ 3 $ 2 Income tax benefit — — — — Stock option expense, net of income taxes 1 — 3 2 Restricted stock units ("RSUs"): Pre-tax compensation expense 3 2 9 7 Income tax benefit — — (1) (1) RSUs, net of income taxes 3 2 8 6 Performance shares and other share-based awards: Pre-tax compensation expense 2 2 6 5 Income tax benefit (1) — (1) — Performance shares and other share-based compensation expense, net of income taxes 1 2 5 5 Total share-based compensation: Pre-tax compensation expense 6 4 18 14 Income tax benefit (1) — (2) (1) Total share-based compensation expense, net of income taxes $ 5 $ 4 $ 16 $ 13 |
Schedule of valuation assumptions for stock options | Nine Months Ended September 30, 2020 2019 Expected life (in years) 5.5 5.5 Risk-free interest rate 1.4 % 2.5 % Expected volatility 19.8 % 19.7 % Expected dividend yield 2.9 % 2.7 % |
Schedule of stock option transactions | Number of Options (in thousands) Weighted Average Exercise Price per Share Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of December 31, 2019 2,055 $ 84.36 5.30 $ 34 Granted 336 88.35 Exercised (93) 45.12 Cancelled (19) 85.75 Outstanding as of September 30, 2020 2,279 $ 86.55 5.37 $ 12 Exercisable as of September 30, 2020 1,740 $ 84.09 4.33 $ 12 |
Schedule of additional information pertaining to stock option activity | Three Months Ended Nine Months Ended September 30, September 30, (dollars in millions, except per share) 2020 2019 2020 2019 Weighted average grant date fair value of stock options granted (per share) $ — $ — $ 11.48 $ 14.02 Total intrinsic value of stock options exercised $ — $ 1 $ 4 $ 7 |
Schedule of restricted unit activity | (RSUs in thousands) Number of Restricted Shares Weighted Average Fair Value per Share Non-vested as of December 31, 2019 339 $ 108.02 Granted 178 88.10 Vested (92) 117.18 Cancelled (14) 102.71 Non-vested as of September 30, 2020 411 $ 97.52 |
Summary of net changes in accumulated other comprehensive loss | (in millions) Cumulative Translation Adjustment Hedging Activities Pension and Postretirement Adjustment Accumulated Other Comprehensive Loss Balance, December 31, 2019 $ (1,089) $ (9) $ (60) $ (1,158) Other comprehensive (loss) before reclassification adjustments (105) (50) — (155) Loss reclassified from accumulated OCI — 56 — 56 Tax (provision) — (2) — (2) Net other comprehensive (loss) income (105) 4 — (101) Balance, September 30, 2020 $ (1,194) $ (5) $ (60) $ (1,259) (in millions) Cumulative Translation Adjustment Hedging Activities Pension and Postretirement Adjustment Accumulated Other Comprehensive Loss Balance, December 31, 2018 $ (1,080) $ (5) $ (69) $ (1,154) Other comprehensive (loss) before reclassification adjustments (48) (16) (2) (66) Loss reclassified from accumulated OCI — 3 — 3 Tax benefit — 3 — 3 Net other comprehensive loss (48) (10) (2) (60) Balance, September 30, 2019 $ (1,128) $ (15) $ (71) $ (1,214) |
Schedule of stockholders equity and redeemable equity | Total Equity Non- Accumulated Redeemable Share-based Redeemable Additional Other Non- Payments Non- Preferred Common Paid-In Treasury Comprehensive Retained Controlling Subject to Controlling (in millions) Stock Stock Capital Stock Loss Earnings Interests Redemption Interests Balance, December 31, 2019 $ — $ 1 $ 1,137 $ (1,040) $ (1,158) $ 3,780 $ 21 $ 31 $ — Net income attributable to Ingredion 75 Net income attributable to non-controlling interests 3 Dividends declared, common stock ($0.63/share) (42) Share-based compensation, net of issuance 5 12 (8) Other comprehensive loss (164) (3) Balance, March 31, 2020 $ — $ 1 $ 1,142 $ (1,028) $ (1,322) $ 3,813 $ 21 $ 23 $ — Net income attributable to Ingredion 66 Net income attributable to non-controlling interests 1 Dividends declared, common stock ($0.63/share) (43) Dividends declared, non-controlling interests (3) Share-based compensation, net of issuance 1 1 4 Other comprehensive income 15 1 Balance, June 30, 2020 $ — $ 1 $ 1,143 $ (1,027) $ (1,307) $ 3,836 $ 20 $ 27 $ — Net income attributable to Ingredion 92 Net income attributable to non-controlling interests 3 (2) Dividends declared, common stock ($0.64/share) (44) Dividends declared, non-controlling interests (2) Acquisition of redeemable non-controlling interests 74 Share-based compensation, net of issuance 2 5 Other comprehensive (loss) income 48 2 Balance, September 30, 2020 $ — $ 1 $ 1,145 $ (1,027) $ (1,259) $ 3,884 $ 21 $ 32 $ 74 Total Equity Non- Accumulated Redeemable Share-based Redeemable Additional Other Non- Payments Non- Preferred Common Paid-In Treasury Comprehensive Retained Controlling Subject to Controlling (in millions) Stock Stock Capital Stock Loss Earnings Interests Redemption Interests Balance, December 31, 2018 $ — $ 1 $ 1,096 $ (1,091) $ (1,154) $ 3,536 $ 20 $ 37 $ — Net income attributable to Ingredion 100 Net income attributable to non-controlling interests 2 Dividends declared, common stock ($0.625/share) (42) Repurchases of common stock 32 31 Share-based compensation, net of issuance 9 10 (16) Other comprehensive loss (6) Balance, March 31, 2019 $ — $ 1 $ 1,137 $ (1,050) $ (1,160) $ 3,594 $ 22 $ 21 $ — Net income attributable to Ingredion 105 Net income attributable to non-controlling interests 2 Dividends declared, common stock ($0.625/share) (43) Dividends declared, non-controlling interests (4) Share-based compensation, net of issuance 1 3 4 Other comprehensive income (loss) 8 (4) Balance, June 30, 2019 $ — $ 1 $ 1,138 $ (1,047) $ (1,152) $ 3,656 $ 16 $ 25 $ — Net income attributable to Ingredion 99 Net income attributable to non-controlling interests 3 Dividends declared, common stock ($0.63/share) (42) Dividends declared, non-controlling interests (2) Repurchases of common stock Share-based compensation, net of issuance (1) 3 3 Other comprehensive (loss) income (62) 2 Balance, September 30, 2019 $ — $ 1 $ 1,137 $ (1,044) $ (1,214) $ 3,713 $ 19 $ 28 $ — |
Schedule of basic and diluted earnings per common share | Three Months Ended September 30, 2020 Three Months Ended September 30, 2019 (in millions, except per share amounts) Net Income Available to Ingredion Weighted Average Shares Per Share Amount Net Income Available to Ingredion Weighted Average Shares Per Share Amount Basic EPS $ 92 67.2 $ 1.37 $ 99 66.9 $ 1.48 Effect of Dilutive Securities: Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards 0.4 0.5 Diluted EPS $ 92 67.6 $ 1.36 $ 99 67.4 $ 1.47 Nine Months Ended September 30, 2020 Nine Months Ended September 30, 2019 (in millions, except per share amounts) Net Income Available to Ingredion Weighted Average Shares Per Share Amount Net Income Available to Ingredion Weighted Average Shares Per Share Amount Basic EPS $ 233 67.2 $ 3.47 $ 304 66.9 $ 4.54 Effect of Dilutive Securities: Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards 0.4 0.5 Diluted EPS $ 233 67.6 $ 3.45 $ 304 67.4 $ 4.51 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2020 | |
Segment Information | |
Schedule of segment reporting of net sales, operating income and total assets | Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2020 2019 2020 2019 Net sales to unaffiliated customers: North America $ 928 $ 984 $ 2,739 $ 2,912 South America 224 245 643 699 Asia-Pacific 207 205 583 611 EMEA 143 140 429 438 Total net sales $ 1,502 $ 1,574 $ 4,394 $ 4,660 Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2020 2019 2020 2019 Operating income: North America $ 132 $ 145 $ 358 $ 409 South America 29 27 68 61 Asia-Pacific 18 22 60 65 EMEA 25 24 73 71 Corporate (25) (25) (86) (69) Subtotal 179 193 473 537 Restructuring/impairment charges (16) (28) (41) (41) Acquisition/integration costs (5) — (8) (2) Charge for fair value markup of acquired inventory (3) — (3) — North America storm damage (2) — (2) — Total operating income $ 153 $ 165 $ 419 $ 494 As of As of (in millions) September 30, 2020 December 31, 2019 Assets: North America (a) $ 4,072 $ 3,924 South America 676 774 Asia-Pacific 1,193 843 EMEA 523 499 Total assets $ 6,464 $ 6,040 (a) For purposes of presentation, North America includes Corporate assets. |
Summary of Significant Accoun_4
Summary of Significant Accounting Standards and Policies - ASUs (Details) | Jan. 01, 2020 |
ASU 2017-04,Intangibles - Goodwill and Other | |
Recently Adopted Accounting Standards | |
Change in Accounting Principle, Accounting Standards Update, Adopted | true |
AUS 2016-13, Financial Instruments - Credit Losses | |
Recently Adopted Accounting Standards | |
Change in Accounting Principle, Accounting Standards Update, Adopted | true |
Summary of Significant Accoun_5
Summary of Significant Accounting Standards and Policies - Indefinite lived Intangible assets (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Indefinite-lived intangible assets and goodwill | ||
Indefinite-lived intangible assets | $ 178 | $ 178 |
Goodwill | 841 | 801 |
Trademarks/tradenames | ||
Indefinite-lived intangible assets and goodwill | ||
Indefinite-lived intangible assets | $ 178 | $ 178 |
Summary of Significant Accoun_6
Summary of Significant Accounting Standards and Policies - Goodwill and accumulated impairment (Details) - USD ($) $ in Millions | 6 Months Ended | 9 Months Ended | |
Jun. 30, 2020 | Sep. 30, 2020 | Dec. 31, 2019 | |
Carrying value of goodwill | |||
Goodwill before impairment charges | $ 956 | ||
Accumulated impairment charges | (155) | ||
Balance at the beginning of the period | $ 801 | $ 801 | |
Acquisitions | 48 | ||
Currency translation | (8) | ||
Balance at the end of the period | 841 | ||
Indefinite-lived intangible assets impairment | 0 | ||
Goodwill impairment | 0 | ||
North America | |||
Carrying value of goodwill | |||
Goodwill before impairment charges | 608 | ||
Accumulated impairment charges | (1) | ||
Balance at the beginning of the period | 607 | 607 | |
Balance at the end of the period | 607 | ||
South America | |||
Carrying value of goodwill | |||
Goodwill before impairment charges | 54 | ||
Accumulated impairment charges | (33) | ||
Balance at the beginning of the period | 21 | 21 | |
Currency translation | (6) | ||
Balance at the end of the period | 15 | ||
Asia-Pacific | |||
Carrying value of goodwill | |||
Goodwill before impairment charges | 229 | ||
Accumulated impairment charges | (121) | ||
Balance at the beginning of the period | 108 | 108 | |
Acquisitions | 48 | ||
Currency translation | (3) | ||
Balance at the end of the period | 153 | ||
EMEA | |||
Carrying value of goodwill | |||
Goodwill before impairment charges | $ 65 | ||
Balance at the beginning of the period | $ 65 | 65 | |
Currency translation | 1 | ||
Balance at the end of the period | $ 66 |
Summary of Significant Accoun_7
Summary of Significant Accounting Standards and Policies - Net Sales (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Disaggregation of revenue | ||||
Net sales | $ 1,502 | $ 1,574 | $ 4,394 | $ 4,660 |
Cost of sales | 1,176 | 1,230 | 3,474 | 3,671 |
Gross profit | $ 326 | 344 | $ 920 | 989 |
North America | ||||
Disaggregation of revenue | ||||
Net sales | 984 | 2,912 | ||
South America | ||||
Disaggregation of revenue | ||||
Net sales | 245 | 699 | ||
Asia-Pacific | ||||
Disaggregation of revenue | ||||
Net sales | 205 | 611 | ||
EMEA | ||||
Disaggregation of revenue | ||||
Net sales | 140 | 438 | ||
Change In Presentation, Shipping and Handling Costs | As Previously Reported | ||||
Disaggregation of revenue | ||||
Net sales before shipping and handling costs | 1,574 | 4,660 | ||
Less: shipping and handling costs | 117 | 349 | ||
Net sales | 1,457 | 4,311 | ||
Cost of sales | 1,113 | 3,322 | ||
Gross profit | 344 | 989 | ||
Change In Presentation, Shipping and Handling Costs | As Previously Reported | North America | ||||
Disaggregation of revenue | ||||
Net sales | 892 | 2,637 | ||
Change In Presentation, Shipping and Handling Costs | As Previously Reported | South America | ||||
Disaggregation of revenue | ||||
Net sales | 234 | 667 | ||
Change In Presentation, Shipping and Handling Costs | As Previously Reported | Asia-Pacific | ||||
Disaggregation of revenue | ||||
Net sales | 196 | 585 | ||
Change In Presentation, Shipping and Handling Costs | As Previously Reported | EMEA | ||||
Disaggregation of revenue | ||||
Net sales | $ 135 | $ 422 |
Acquisitions - PureCircle (Deta
Acquisitions - PureCircle (Details) - USD ($) $ in Millions | Jul. 01, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Acquisitions | ||||
Payment for acquisition, net of cash acquired | $ 208 | $ 42 | ||
Redeemable non-controlling interests | 74 | |||
Preliminary purchase price allocation | ||||
Goodwill | 841 | $ 801 | ||
PureCircle Limited | Ingredion SRSS | ||||
Acquisitions | ||||
Ownership percentage | 100.00% | |||
Ingredion SRSS | ||||
Acquisitions | ||||
Ownership percentage | 75.00% | |||
Ingredion SRSS | Former PureCircle Shareholders | ||||
Acquisitions | ||||
Ownership percentage | 25.00% | |||
PureCircle Limited | ||||
Acquisitions | ||||
Payment for acquisition, net of cash acquired | $ 208 | |||
Cash acquired | 14 | |||
Redeemable non-controlling interests | $ 74 | |||
Lag period over which financial results will be reported during the integration process | 1 month | |||
Preliminary purchase price allocation | ||||
Working capital (excluding cash) | 77 | |||
Property, plant and equipment | 89 | |||
Other, net | 4 | |||
Identifiable intangible assets | 64 | |||
Goodwill | 48 | |||
Total purchase price, net of cash | $ 282 |
Acquisitions - Western Polymer
Acquisitions - Western Polymer (Details) - USD ($) $ in Millions | Mar. 01, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 |
Acquisitions | ||||
Payment for acquisition, net of cash acquired | $ 208 | $ 42 | ||
Cash acquired from acquisition | 14 | 4 | ||
Goodwill | $ 841 | $ 801 | ||
Western Polymer | ||||
Acquisitions | ||||
Payment for acquisition, net of cash acquired | $ 42 | |||
Cash acquired from acquisition | 4 | |||
Goodwill | 13 | |||
Tangible assets, net | $ 29 | |||
Pre-tax acquisition and integration costs | $ 2 |
Acquisitions - Integration cost
Acquisitions - Integration costs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |
PureCircle Limited | |||
Acquisitions | |||
Pre-tax acquisition and integration costs | $ 5 | $ 8 | |
Western Polymer | |||
Acquisitions | |||
Pre-tax acquisition and integration costs | $ 2 |
Revenue Recognition (Details)
Revenue Recognition (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | |
Disaggregation of revenue | ||||
Revenue, practical expedient, incremental cost of obtaining contract | true | |||
Number of reportable business segments | segment | 4 | |||
Total net sales | $ 1,502 | $ 1,574 | $ 4,394 | $ 4,660 |
North America | ||||
Disaggregation of revenue | ||||
Total net sales | 928 | 984 | 2,739 | 2,912 |
South America | ||||
Disaggregation of revenue | ||||
Total net sales | 224 | 245 | 643 | 699 |
Asia-Pacific | ||||
Disaggregation of revenue | ||||
Total net sales | 207 | 205 | 583 | 611 |
EMEA | ||||
Disaggregation of revenue | ||||
Total net sales | $ 143 | $ 140 | $ 429 | $ 438 |
Restructuring and Impairment _3
Restructuring and Impairment Charges - Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Nov. 03, 2020 | |
Restructuring and impairment charges | |||||
Restructuring/impairment charges | $ 16 | $ 28 | $ 41 | $ 41 | |
Restructuring charges | 28 | 41 | |||
Verdient Foods, Inc. | Subsequent Event. | |||||
Restructuring and impairment charges | |||||
Additional percentage of outstanding shares acquired | 80.00% | ||||
Verdient Foods, Inc. | |||||
Restructuring and impairment charges | |||||
Equity method investment, Other than temporary impairment | 10 | 10 | |||
Cost Smart cost of sales and SG&A Program | Employee-related severance costs | |||||
Restructuring and impairment charges | |||||
Restructuring charges | 3 | ||||
Cost Smart Cost of Sales Program | |||||
Restructuring and impairment charges | |||||
Restructuring charges | 2 | 14 | 17 | 18 | |
Cost Smart Cost of Sales Program | Cessation of wet-milling | |||||
Restructuring and impairment charges | |||||
Restructuring charges | 2 | ||||
Cost Smart Cost of Sales Program, Production facility closure, Australia | |||||
Restructuring and impairment charges | |||||
Restructuring charges | 1 | 10 | |||
Cost Smart Cost of Sales Program, Production facility closure, Australia | Minimum | |||||
Restructuring and impairment charges | |||||
Expected additional costs | 1 | 1 | |||
Cost Smart Cost of Sales Program, Production facility closure, Australia | Maximum | |||||
Restructuring and impairment charges | |||||
Expected additional costs | 2 | 2 | |||
Cost Smart Cost of Sales Program, Production facility closure, Australia | Asset write-off | |||||
Restructuring and impairment charges | |||||
Restructuring charges | 6 | ||||
Cost Smart Cost of Sales Program, Production facility closure, Australia | Accelerated depreciation | |||||
Restructuring and impairment charges | |||||
Restructuring charges | 1 | ||||
Cost Smart Cost of Sales Program, Production facility closure, Australia | Other restructuring costs | |||||
Restructuring and impairment charges | |||||
Restructuring charges | 3 | ||||
Cost Smart Cost of Sales Program, Production facility closure, Stockton, California | |||||
Restructuring and impairment charges | |||||
Restructuring charges | 1 | 6 | |||
Cost Smart Cost of Sales Program, Production facility closure, Stockton, California | Accelerated depreciation | |||||
Restructuring and impairment charges | |||||
Restructuring charges | 4 | ||||
Cost Smart Cost of Sales Program, Production facility closure, Stockton, California | Employee-related severance costs | |||||
Restructuring and impairment charges | |||||
Restructuring charges | 1 | ||||
Cost Smart Cost of Sales Program, Production facility closure, Stockton, California | Other restructuring costs | |||||
Restructuring and impairment charges | |||||
Restructuring charges | 1 | ||||
Cost Smart Cost of Sales Program, North America | Other restructuring costs | |||||
Restructuring and impairment charges | |||||
Restructuring charges | 1 | ||||
Cost Smart SG&A Program | |||||
Restructuring and impairment charges | |||||
Restructuring charges | 4 | 14 | |||
Cost Smart SG&A Program | Employee-related severance costs | |||||
Restructuring and impairment charges | |||||
Restructuring charges | 2 | ||||
Cost Smart SG&A Program | Employee-related severance and other costs | |||||
Restructuring and impairment charges | |||||
Restructuring charges | 14 | 23 | |||
Cost Smart SG&A Program | Other restructuring costs | |||||
Restructuring and impairment charges | |||||
Restructuring charges | $ 12 | ||||
Cost Smart SG&A Program, Latin American Finance Transformation Initiative | Other restructuring costs | |||||
Restructuring and impairment charges | |||||
Restructuring charges | $ 1 | $ 2 | |||
Cost Smart SG&A Program, North America | |||||
Restructuring and impairment charges | |||||
Restructuring charges | $ 4 |
Restructuring and Impairment _4
Restructuring and Impairment Charges - Employee-related severance (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 9 Months Ended | |
Sep. 30, 2019 | Jun. 30, 2020 | Sep. 30, 2020 | Sep. 30, 2019 | |
Restructuring accrual | ||||
Restructuring charges | $ 28 | $ 41 | ||
Goodwill impairment | $ 0 | |||
Indefinite-lived intangible assets impairment | 0 | |||
Employee-related severance costs | ||||
Restructuring accrual | ||||
Balance in severance accrual at beginning of period | $ 15 | $ 15 | ||
Payments made to terminated employees | (11) | |||
Foreign exchange translation | (1) | |||
Balance in severance accrual at end of period | 6 | |||
Restructuring reserve, Expected to be paid in next 12 months | 5 | |||
Cost Smart cost of sales and SG&A Program | Employee-related severance costs | ||||
Restructuring accrual | ||||
Restructuring charges | $ 3 |
Restructuring and Impairment _5
Restructuring and Impairment Charges - Other assets (Details) $ in Millions | Sep. 30, 2020USD ($) |
Other assets | |
Restructuring and impairment charges | |
Assets held for sale | $ 8 |
Financial Instruments, Deriva_3
Financial Instruments, Derivatives and Hedging Activities - Commodity price hedging (Details) bu in Millions, MMBTU in Millions | 9 Months Ended |
Sep. 30, 2020MMBTUbu | |
Commodity Contracts | Minimum | |
Financial instruments, derivatives and hedging activities | |
Maturity period of price risk derivative | 12 months |
Commodity Contracts | Maximum | |
Financial instruments, derivatives and hedging activities | |
Maturity period of price risk derivative | 24 months |
Corn Commodity | |
Financial instruments, derivatives and hedging activities | |
Futures contract (in bushels for corn and gallons for ethanol) | bu | 64 |
Natural Gas Commodity | |
Financial instruments, derivatives and hedging activities | |
Natural gas futures contract (in mmbtu) | MMBTU | 29 |
Financial Instruments, Deriva_4
Financial Instruments, Derivatives and Hedging Activities - Foreign currency hedging (Details) - Foreign Currency Forward Contracts - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Short | Not Designated as Hedging Instrument | ||
Financial instruments, derivatives and hedging activities | ||
Derivative notional amount | $ 648 | $ 621 |
Long | Not Designated as Hedging Instrument | ||
Financial instruments, derivatives and hedging activities | ||
Derivative notional amount | 457 | 356 |
Cash Flow Hedging | Short | Designated as Hedging Instrument | ||
Financial instruments, derivatives and hedging activities | ||
Derivative notional amount | 495 | 374 |
Cash Flow Hedging | Long | Designated as Hedging Instrument | ||
Financial instruments, derivatives and hedging activities | ||
Derivative notional amount | $ 619 | $ 541 |
Financial Instruments, Deriva_5
Financial Instruments, Derivatives and Hedging Activities - Interest rate hedging (Details) - 4.625% senior notes due November 1, 2020 $ in Millions | Dec. 31, 2019USD ($) |
Financial instruments, derivatives and hedging activities | |
Principal amount | $ 400 |
Fair Value Hedging | Interest Rate Swap | |
Financial instruments, derivatives and hedging activities | |
Principal amount | $ 200 |
Debt, fixed interest rate (as a percent) | 4.625% |
Financial Instruments, Deriva_6
Financial Instruments, Derivatives and Hedging Activities - CF Hedges in AOCI (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Accumulated Other Comprehensive Loss. | ||
Accumulated other comprehensive income (loss) | $ (1,259) | $ (1,158) |
Cash Flow Hedging | ||
Accumulated Other Comprehensive Loss. | ||
Accumulated other comprehensive income (loss) | (5) | (9) |
Cash Flow Hedging | Commodity Contracts | ||
Accumulated Other Comprehensive Loss. | ||
Accumulated other comprehensive income (loss) | 2 | (11) |
Tax effect on gains (losses) of derivative instruments | 5 | |
Cash Flow Hedging | Foreign Currency Contracts | ||
Accumulated Other Comprehensive Loss. | ||
Accumulated other comprehensive income (loss) | (3) | 3 |
Tax effect on gains (losses) of derivative instruments | 1 | (1) |
Cash Flow Hedging | Interest Rate Contracts | ||
Accumulated Other Comprehensive Loss. | ||
Accumulated other comprehensive income (loss) | (4) | $ (1) |
Tax effect on gains (losses) of derivative instruments | $ 1 |
Financial Instruments, Deriva_7
Financial Instruments, Derivatives and Hedging Activities - Balance Sheet Location (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Designated as Hedging Instrument | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | $ 22 | $ 17 |
Fair value of derivative instruments, Liabilities | 11 | 25 |
Fair value of derivative instruments, Net Assets/(Liabilities) | 11 | (8) |
Designated as Hedging Instrument | Accounts receivable, net | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 18 | 12 |
Designated as Hedging Instrument | Other assets | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 4 | 5 |
Designated as Hedging Instrument | Accounts payable and accrued liabilities | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Liabilities | 7 | 17 |
Designated as Hedging Instrument | Non-current liabilities | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Liabilities | 4 | 8 |
Designated as Hedging Instrument | Commodity Contracts | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 22 | 6 |
Fair value of derivative instruments, Liabilities | 7 | 17 |
Fair value of derivative instruments, Net Assets/(Liabilities) | 15 | (11) |
Designated as Hedging Instrument | Commodity Contracts | Accounts receivable, net | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 18 | 5 |
Designated as Hedging Instrument | Commodity Contracts | Other assets | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 4 | 1 |
Designated as Hedging Instrument | Commodity Contracts | Accounts payable and accrued liabilities | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Liabilities | 6 | 13 |
Designated as Hedging Instrument | Commodity Contracts | Non-current liabilities | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Liabilities | 1 | 4 |
Designated as Hedging Instrument | Foreign Currency Forward Contracts | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 10 | |
Fair value of derivative instruments, Liabilities | 4 | 8 |
Fair value of derivative instruments, Net Assets/(Liabilities) | (4) | 2 |
Designated as Hedging Instrument | Foreign Currency Forward Contracts | Accounts receivable, net | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 7 | |
Designated as Hedging Instrument | Foreign Currency Forward Contracts | Other assets | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 3 | |
Designated as Hedging Instrument | Foreign Currency Forward Contracts | Accounts payable and accrued liabilities | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Liabilities | 1 | 4 |
Designated as Hedging Instrument | Foreign Currency Forward Contracts | Non-current liabilities | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Liabilities | 3 | 4 |
Designated as Hedging Instrument | Interest Rate Contracts | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 1 | |
Fair value of derivative instruments, Net Assets/(Liabilities) | 1 | |
Designated as Hedging Instrument | Interest Rate Contracts | Other assets | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 1 | |
Not Designated as Hedging Instrument | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 10 | 7 |
Fair value of derivative instruments, Liabilities | 26 | 11 |
Fair value of derivative instruments, Net Assets/(Liabilities) | (16) | (4) |
Not Designated as Hedging Instrument | Accounts receivable, net | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 7 | 6 |
Not Designated as Hedging Instrument | Other assets | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 3 | 1 |
Not Designated as Hedging Instrument | Accounts payable and accrued liabilities | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Liabilities | 24 | 9 |
Not Designated as Hedging Instrument | Non-current liabilities | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Liabilities | 2 | 2 |
Not Designated as Hedging Instrument | Commodity Contracts | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 2 | |
Fair value of derivative instruments, Liabilities | 1 | 1 |
Fair value of derivative instruments, Net Assets/(Liabilities) | (1) | 1 |
Not Designated as Hedging Instrument | Commodity Contracts | Accounts receivable, net | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 2 | |
Not Designated as Hedging Instrument | Commodity Contracts | Accounts payable and accrued liabilities | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Liabilities | 1 | 1 |
Not Designated as Hedging Instrument | Foreign Currency Forward Contracts | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 10 | 5 |
Fair value of derivative instruments, Liabilities | 25 | 10 |
Fair value of derivative instruments, Net Assets/(Liabilities) | (15) | (5) |
Not Designated as Hedging Instrument | Foreign Currency Forward Contracts | Accounts receivable, net | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 7 | 4 |
Not Designated as Hedging Instrument | Foreign Currency Forward Contracts | Other assets | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Assets | 3 | 1 |
Not Designated as Hedging Instrument | Foreign Currency Forward Contracts | Accounts payable and accrued liabilities | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Liabilities | 23 | 8 |
Not Designated as Hedging Instrument | Foreign Currency Forward Contracts | Non-current liabilities | ||
Fair value of derivatives | ||
Fair value of derivative instruments, Liabilities | $ 2 | $ 2 |
Financial Instruments, Deriva_8
Financial Instruments, Derivatives and Hedging Activities - Additional information - FV hedges (Details) - Fair Value Hedging - Long-term debt $ in Millions | Dec. 31, 2019USD ($) |
Additional information pertaining to fair value hedges | |
Carrying Amount of the Hedged Liabilities | $ (201) |
Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of Hedged Liabilities | $ (1) |
Financial Instruments, Deriva_9
Financial Instruments, Derivatives and Hedging Activities - Additional information - CF hedges (Details) - Cash Flow Hedging - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Hedging relationships | ||||
Gains (Losses) Recognized in OCI | $ 16 | $ (17) | $ (50) | $ (16) |
Gains (Losses) Reclassified from AOCI into Income | (31) | 3 | (56) | (3) |
Commodity Contracts | ||||
Hedging relationships | ||||
Gains (Losses) Recognized in OCI | 21 | (20) | (36) | (20) |
Commodity Contracts | Cost of sales | ||||
Hedging relationships | ||||
Gains (Losses) Reclassified from AOCI into Income | (30) | 2 | (54) | (1) |
Foreign Currency Contracts | ||||
Hedging relationships | ||||
Gains (Losses) Recognized in OCI | (5) | 3 | (9) | 4 |
Foreign Currency Contracts | Net sales/Cost of sales | ||||
Hedging relationships | ||||
Gains (Losses) Reclassified from AOCI into Income | $ (1) | $ 1 | (1) | (1) |
Interest Rate Contracts | ||||
Hedging relationships | ||||
Gains (Losses) Recognized in OCI | (5) | |||
Interest Rate Contracts | Financing costs, net | ||||
Hedging relationships | ||||
Gains (Losses) Reclassified from AOCI into Income | $ (1) | $ (1) |
Financial Instruments, Deriv_10
Financial Instruments, Derivatives and Hedging Activities - Gain (Losses) Recognized in Income (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Hedging relationships | ||
Loss expected to be reclassified into earnings during the next twelve months, net of tax | $ (3) | |
Loss expected to be reclassified into earnings during the next twelve months, income tax effect | 1 | |
Fair Value Hedging | Interest Rate Contracts | Financing costs, net | ||
Hedging relationships | ||
Gains (losses) recognized in income, Hedging instruments | (1) | $ 3 |
Gains (losses) recognized in income, Hedged item | $ 1 | $ (3) |
Financial Instruments, Deriv_11
Financial Instruments, Derivatives and Hedging Activities - FV (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Carrying value | ||
Fair value of assets and liabilities | ||
Long-term debt | $ 2,100 | |
Fair Value, Measurements, Recurring | ||
Fair value of assets and liabilities | ||
Available for sale securities | 10 | $ 13 |
Derivative assets | 32 | 24 |
Derivative liabilities | 37 | 36 |
Long-term debt | 2,106 | 1,751 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Fair value of assets and liabilities | ||
Available for sale securities | 10 | 13 |
Derivative assets | 15 | 7 |
Derivative liabilities | 5 | 5 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Fair value of assets and liabilities | ||
Derivative assets | 17 | 17 |
Derivative liabilities | 32 | 31 |
Long-term debt | $ 2,106 | $ 1,751 |
Debt - Components (Details)
Debt - Components (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Financing Arrangements | ||||
Other long-term borrowings | $ 1 | |||
Fair value adjustment related to hedged fixed rate debt instruments | $ 1 | |||
Long-term debt | 2,115 | 1,766 | ||
Short-term borrowings | 62 | 82 | ||
Total debt | $ 2,177 | $ 1,848 | ||
2.9% senior notes due June 1, 2030 | ||||
Financing Arrangements | ||||
Debt, interest rate (as a percent) | 2.90% | 2.90% | ||
Long-term debt excluding fair value adjustments | $ 594 | |||
3.2% senior notes due October 1, 2026 | ||||
Financing Arrangements | ||||
Debt, interest rate (as a percent) | 3.20% | 3.20% | ||
Long-term debt excluding fair value adjustments | $ 497 | $ 497 | ||
3.9% senior notes due June 1, 2050 | ||||
Financing Arrangements | ||||
Debt, interest rate (as a percent) | 3.90% | 3.90% | ||
Long-term debt excluding fair value adjustments | $ 390 | |||
6.625% senior notes due April 15, 2037 | ||||
Financing Arrangements | ||||
Debt, interest rate (as a percent) | 6.625% | 6.625% | ||
Long-term debt excluding fair value adjustments | $ 253 | $ 253 | ||
4.625% senior notes due November 1, 2020 | ||||
Financing Arrangements | ||||
Debt, interest rate (as a percent) | 4.625% | 4.625% | ||
Long-term debt excluding fair value adjustments | $ 400 | |||
5.62% senior notes due March 25, 2020 | ||||
Financing Arrangements | ||||
Debt, interest rate (as a percent) | 5.62% | 5.62% | ||
Long-term debt excluding fair value adjustments | $ 200 | |||
Term loan credit agreement due April 12, 2021 | ||||
Financing Arrangements | ||||
Long-term debt excluding fair value adjustments | $ 380 | 405 | ||
Revolving credit facility | ||||
Financing Arrangements | ||||
Long-term debt excluding fair value adjustments | $ 10 |
Debt - Additional information (
Debt - Additional information (Details) - USD ($) $ in Millions | Jul. 09, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
2.9% senior notes due June 1, 2030 and 3.9% senior notes due June 1, 2050 | |||||
Financing Arrangements | |||||
Discount | $ 7 | ||||
Debt issuance costs capitalized | $ 9 | ||||
2.9% senior notes due June 1, 2030 | |||||
Financing Arrangements | |||||
Debt, interest rate (as a percent) | 2.90% | 2.90% | |||
Principal amount | $ 600 | ||||
3.9% senior notes due June 1, 2050 | |||||
Financing Arrangements | |||||
Debt, interest rate (as a percent) | 3.90% | 3.90% | |||
Principal amount | $ 400 | ||||
Revolving credit facility | |||||
Financing Arrangements | |||||
Repayments of long-term debt | $ 394 | ||||
4.625% senior notes due November 1, 2020 | |||||
Financing Arrangements | |||||
Debt, interest rate (as a percent) | 4.625% | 4.625% | |||
Principal amount | $ 400 | ||||
Amount of debt redeemed | $ 400 | ||||
Debt redemption price | 409 | ||||
Accrued interest portion of debt redemption price | 4 | ||||
"Make whole" premium portion of debt redemption price | $ 5 | ||||
5.62% senior notes due March 25, 2020 | |||||
Financing Arrangements | |||||
Repayments of long-term debt | $ 200 | ||||
Debt, interest rate (as a percent) | 5.62% | 5.62% |
Leases - Lease costs (Details)
Leases - Lease costs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Leases | ||||
Finance lease liability | $ 0 | $ 0 | ||
Lease Cost | ||||
Operating lease cost | 14 | $ 13 | 40 | $ 40 |
Variable operating lease cost | 8 | 6 | 23 | 18 |
Short term lease cost | 1 | 1 | 3 | 2 |
Lease cost | $ 23 | $ 20 | $ 66 | $ 60 |
Leases - Operating lease reconc
Leases - Operating lease reconciliation (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Reconciliation of future undiscounted cash flows to the operating lease liabilities and the related ROU assets | ||
2020 (Excluding the nine months ended September 30, 2020) | $ 14 | |
2021 | 49 | |
2022 | 40 | |
2023 | 31 | |
2024 | 21 | |
Thereafter | 37 | |
Total future lease payments | 192 | |
Less imputed interest | 23 | |
Present value of future lease payments | 169 | |
Less current lease liabilities | 46 | |
Non-current operating lease liabilities | 123 | $ 120 |
Operating lease assets | $ 161 | $ 151 |
Leases - Other Information (Det
Leases - Other Information (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Other information | |||||
Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases | $ 14 | $ 12 | $ 40 | $ 41 | |
Right-of-use assets obtained in exchange for lease liabilities: Operating leases | $ 24 | $ 11 | $ 45 | $ 178 | |
Weighted average remaining lease term (years): Operating leases | 5 years | 5 years | 5 years 6 months | ||
Weighted average discount rate: Operating leases | 5.10% | 5.10% | 5.70% |
Taxes - Effective tax rate (Det
Taxes - Effective tax rate (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Taxes | ||||
Effective tax rate (as a percent) | 30.10% | 27.10% | 34.40% | 27.80% |
Net Periodic Pension and Post_3
Net Periodic Pension and Postretirement Benefit Costs (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
US | ||||
Employer contributions | ||||
Employer contributions | $ 1 | |||
Non-US | ||||
Employer contributions | ||||
Employer contributions | 2 | |||
Pension Plan | ||||
Anticipated cash contributions | ||||
Anticipated cash contributions in current year | $ 4 | 4 | ||
Pension Plan | US | ||||
Components of Net Periodic Benefit Costs | ||||
Service cost | 2 | $ 2 | 4 | $ 4 |
Interest cost | 2 | 4 | 8 | 11 |
Expected return on plan assets | (5) | (5) | (16) | (14) |
Net periodic benefit cost/(benefit) | (1) | 1 | (4) | 1 |
Anticipated cash contributions | ||||
Anticipated cash contributions in current year | 1 | 1 | ||
Pension Plan | Non-US | ||||
Components of Net Periodic Benefit Costs | ||||
Service cost | 1 | 3 | 2 | |
Interest cost | 2 | 3 | 8 | 8 |
Expected return on plan assets | (2) | (2) | (6) | (6) |
Amortization of actuarial loss | 1 | 2 | 1 | |
Net periodic benefit cost/(benefit) | 2 | 1 | 7 | 5 |
Anticipated cash contributions | ||||
Anticipated cash contributions in current year | $ 3 | 3 | ||
Postemployment Retirement Benefits | ||||
Components of Net Periodic Benefit Costs | ||||
Interest cost | 1 | 2 | 2 | |
Amortization of prior service credit | (1) | (1) | ||
Net periodic benefit cost/(benefit) | $ 1 | $ 1 | $ 1 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Inventories | ||
Finished and in process | $ 593 | $ 565 |
Raw materials | 221 | 237 |
Manufacturing supplies and other | 94 | 59 |
Total inventories | $ 908 | $ 861 |
Equity - Treasury stock (Detail
Equity - Treasury stock (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | Feb. 06, 2019 | Feb. 05, 2019 | Nov. 05, 2018 | Sep. 30, 2020 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Oct. 22, 2018 |
Treasury stock: | ||||||||
Purchase/acquisition of treasury stock (in shares) | 0 | 0 | ||||||
Additional Paid-in Capital | ||||||||
Treasury stock: | ||||||||
Repurchases of common stock, net | $ 32 | $ 32 | ||||||
Treasury Stock | ||||||||
Treasury stock: | ||||||||
Repurchases of common stock, net | $ 31 | $ 31 | ||||||
ASR agreement | ||||||||
Treasury stock: | ||||||||
Payment made for repurchase of shares | $ 455 | |||||||
Purchase/acquisition of treasury stock (in shares) | 4 | 4 | ||||||
Repurchases of common stock, net | $ (392) | $ (423) | ||||||
VWAP (in dollars per share) | $ 98.04 | |||||||
Amount of cash returned from upfront payment in repurchase of stock | $ 63 | |||||||
2018 Stock Repurchase Program | ||||||||
Treasury stock: | ||||||||
Shares authorized to be repurchased (in shares) | 8 |
Equity - Share-based payments (
Equity - Share-based payments (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Share-based compensation expense | ||||
Pre-tax compensation expense | $ 6 | $ 4 | $ 18 | $ 14 |
Income tax benefit | (1) | (2) | (1) | |
Total share-based compensation expense, net of income taxes | 5 | 4 | 16 | 13 |
Stock options | ||||
Share-based compensation expense | ||||
Pre-tax compensation expense | 1 | 3 | 2 | |
Total share-based compensation expense, net of income taxes | 1 | 3 | 2 | |
Restricted stock units (RSUs) | ||||
Share-based compensation expense | ||||
Pre-tax compensation expense | 3 | 2 | 9 | 7 |
Income tax benefit | (1) | (1) | ||
Total share-based compensation expense, net of income taxes | 3 | 2 | 8 | 6 |
Performance shares and other share-based awards | ||||
Share-based compensation expense | ||||
Pre-tax compensation expense | 2 | 2 | 6 | 5 |
Income tax benefit | (1) | (1) | ||
Total share-based compensation expense, net of income taxes | $ 1 | $ 2 | $ 5 | $ 5 |
Equity - Stock options (Details
Equity - Stock options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | Dec. 31, 2019 | |
Stock options, Number of Options | ||||
Outstanding at the beginning of the period (in shares) | 2,055 | |||
Granted (in shares) | 336 | 247 | ||
Exercised (in shares) | (93) | |||
Cancelled (in shares) | (19) | |||
Outstanding at the end of the period (in shares) | 2,279 | 2,055 | ||
Exercisable at the end of the period (in shares) | 1,740 | |||
Stock options, Weighted Average Exercise Price per Share | ||||
Outstanding at the beginning of the period (in dollars per share) | $ 84.36 | |||
Granted (in dollars per share) | 88.35 | |||
Exercised (in dollars per share) | 45.12 | |||
Cancelled (in dollars per share) | 85.75 | |||
Outstanding at the end of the period (in dollars per share) | 86.55 | $ 84.36 | ||
Exercisable at the end of the period (in dollars per share) | $ 84.09 | |||
Additional information pertaining to stock options | ||||
Average Remaining Contractual Term, Outstanding | 5 years 4 months 13 days | 5 years 3 months 18 days | ||
Average Remaining Contractual Term, Exercisable | 4 years 3 months 29 days | |||
Aggregate Intrinsic Value, Outstanding (in dollars) | $ 12 | $ 34 | ||
Aggregate Intrinsic Value, Exercisable (in dollars) | 12 | |||
Cash received from exercise of stock options | $ 5 | |||
Weighted average grant date fair value of stock options granted (per share) | $ 11.48 | $ 14.02 | ||
Total intrinsic value of stock options exercised | $ 1 | $ 4 | $ 7 | |
Stock options | ||||
Share-based compensation | ||||
Term of award | 10 years | |||
Period of vesting | 3 years | |||
Required service period | 1 year | |||
Assumptions used to measure the fair value of awards | ||||
Expected life | 5 years 6 months | 5 years 6 months | ||
Risk-free interest rate (as a percent) | 1.40% | 2.50% | ||
Expected volatility (as a percent) | 19.80% | 19.70% | ||
Expected dividend yield (as a percent) | 2.90% | 2.70% | ||
Additional information pertaining to stock options | ||||
Unrecognized compensation cost | $ 3 | |||
Weighted-average period for amortization of unrecognized compensation cost | 1 year 6 months |
Equity - Restricted stock units
Equity - Restricted stock units (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 9 Months Ended | |||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | |
Other disclosures | ||||||||
Share-based payments subject to redemption | $ 32 | $ 27 | $ 23 | $ 31 | $ 28 | $ 25 | $ 21 | $ 37 |
Restricted stock units (RSUs) | ||||||||
Share-based compensation | ||||||||
Vesting terms | 3 years | |||||||
Service period over which compensation expense would be amortized | 1 year | |||||||
Restricted stock unit activity | ||||||||
Non-vested at the beginning of the period (in shares) | 339 | |||||||
Granted (in shares) | 178 | |||||||
Vested (in shares) | (92) | |||||||
Cancelled (in shares) | (14) | |||||||
Non-vested at the end of the period (in shares) | 411 | |||||||
Weighted-average fair value per share | ||||||||
Non-vested at the beginning of the period (in dollars per share) | $ 108.02 | |||||||
Granted (in dollars per share) | 88.10 | |||||||
Vested (in dollars per share) | 117.18 | |||||||
Cancelled (in dollars per share) | 102.71 | |||||||
Non-vested at the end of the period (in dollars per share) | $ 97.52 | |||||||
Other disclosures | ||||||||
Unrecognized compensation cost | $ 18 | |||||||
Weighted-average period for amortization of unrecognized compensation cost | 1 year 9 months 18 days |
Equity - Performance shares (De
Equity - Performance shares (Details) $ / shares in Units, shares in Thousands, $ in Millions | 9 Months Ended | 12 Months Ended | ||||||
Sep. 30, 2020USD ($)item$ / sharesshares | Dec. 31, 2018USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | |
Share-based compensation | ||||||||
Share-based payments subject to redemption | $ | $ 32 | $ 37 | $ 27 | $ 23 | $ 31 | $ 28 | $ 25 | $ 21 |
Performance Shares | ||||||||
Share-based compensation | ||||||||
Number of tranches | item | 2 | |||||||
Vesting terms | 3 years | |||||||
Granted (in shares) | shares | 81 | |||||||
Weighted-average fair value per share, Granted (in dollars per share) | $ / shares | $ 94.48 | |||||||
Unrecognized compensation cost | $ | $ 6 | |||||||
Remaining requisite service period (in years) | 1 year 10 months 24 days | |||||||
Cancelled (in shares) | shares | 3 | |||||||
Market-based performance shares | ||||||||
Share-based compensation | ||||||||
Percentage of share-based compensation award | 50.00% | |||||||
Performance shares calculation period (in years) | 3 years | |||||||
Vesting terms | 3 years | |||||||
Market-based performance shares | Minimum | ||||||||
Share-based compensation | ||||||||
Performance shares available for vesting (as a percent) | 0.00% | |||||||
Market-based performance shares | Maximum | ||||||||
Share-based compensation | ||||||||
Performance shares available for vesting (as a percent) | 200.00% | |||||||
Internal-based performance based | ||||||||
Share-based compensation | ||||||||
Percentage of share-based compensation award | 50.00% | |||||||
Performance shares calculation period (in years) | 3 years | |||||||
Vesting terms | 3 years | |||||||
Internal-based performance based | Minimum | ||||||||
Share-based compensation | ||||||||
Performance shares available for vesting (as a percent) | 0.00% | |||||||
Internal-based performance based | Maximum | ||||||||
Share-based compensation | ||||||||
Performance shares available for vesting (as a percent) | 200.00% | |||||||
Performance Shares Award Granted in 2017 | ||||||||
Share-based compensation | ||||||||
Award pay out achieved (as a percent) | 0.00% |
Equity - AOCI (Details)
Equity - AOCI (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2020 | Sep. 30, 2019 | |
Accumulated Other Comprehensive Loss | ||
Balance at the beginning of the period | $ 2,720 | |
Balance at the end of the period | 2,744 | |
Cumulative Translation Adjustment | ||
Accumulated Other Comprehensive Loss | ||
Balance at the beginning of the period | (1,089) | $ (1,080) |
Other comprehensive (loss) before reclassification adjustments | (105) | (48) |
Net other comprehensive (loss) income | (105) | (48) |
Balance at the end of the period | (1,194) | (1,128) |
Hedging Activities | ||
Accumulated Other Comprehensive Loss | ||
Balance at the beginning of the period | (9) | (5) |
Other comprehensive (loss) before reclassification adjustments | (50) | (16) |
Loss reclassified from accumulated OCI | 56 | 3 |
Tax benefit (provision) | (2) | 3 |
Net other comprehensive (loss) income | 4 | (10) |
Balance at the end of the period | (5) | (15) |
Pension and other postretirement plans | ||
Accumulated Other Comprehensive Loss | ||
Balance at the beginning of the period | (60) | (69) |
Other comprehensive (loss) before reclassification adjustments | (2) | |
Net other comprehensive (loss) income | (2) | |
Balance at the end of the period | (60) | (71) |
Accumulated Other Comprehensive Loss | ||
Accumulated Other Comprehensive Loss | ||
Balance at the beginning of the period | (1,158) | (1,154) |
Other comprehensive (loss) before reclassification adjustments | (155) | (66) |
Loss reclassified from accumulated OCI | 56 | 3 |
Tax benefit (provision) | (2) | 3 |
Net other comprehensive (loss) income | (101) | (60) |
Balance at the end of the period | $ (1,259) | $ (1,214) |
Equity - Statements of Equity w
Equity - Statements of Equity with dividends per share (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Balance | $ 2,741 | $ 2,741 | ||||||
Balance | $ 2,765 | 2,765 | ||||||
Dividends declared, common stock (in dollars per share) | $ 0.64 | $ 0.63 | $ 0.63 | $ 0.63 | $ 0.625 | $ 0.625 | ||
Common Stock | ||||||||
Balance | $ 1 | $ 1 | $ 1 | $ 1 | $ 1 | $ 1 | 1 | $ 1 |
Balance | 1 | 1 | 1 | 1 | 1 | 1 | 1 | 1 |
Additional Paid-in Capital | ||||||||
Balance | 1,143 | 1,142 | 1,137 | 1,138 | 1,137 | 1,096 | 1,137 | 1,096 |
Repurchases of common stock, net | 32 | 32 | ||||||
Share-based compensation, net of issuance | 2 | 1 | 5 | (1) | 1 | 9 | 8 | 9 |
Balance | 1,145 | 1,143 | 1,142 | 1,137 | 1,138 | 1,137 | 1,145 | 1,137 |
Treasury Stock | ||||||||
Balance | (1,027) | (1,028) | (1,040) | (1,047) | (1,050) | (1,091) | (1,040) | (1,091) |
Repurchases of common stock, net | 31 | 31 | ||||||
Share-based compensation, net of issuance | 1 | 12 | 3 | 3 | 10 | 13 | 16 | |
Balance | (1,027) | (1,027) | (1,028) | (1,044) | (1,047) | (1,050) | (1,027) | (1,044) |
Accumulated Other Comprehensive Loss | ||||||||
Balance | (1,307) | (1,322) | (1,158) | (1,152) | (1,160) | (1,154) | (1,158) | (1,154) |
Other comprehensive income (loss) | 48 | 15 | (164) | (62) | 8 | (6) | (101) | (60) |
Balance | (1,259) | (1,307) | (1,322) | (1,214) | (1,152) | (1,160) | (1,259) | (1,214) |
Retained Earnings | ||||||||
Balance | 3,836 | 3,813 | 3,780 | 3,656 | 3,594 | 3,536 | 3,780 | 3,536 |
Net income | 92 | 66 | 75 | 99 | 105 | 100 | 233 | 304 |
Dividends declared, common stock | (44) | (43) | (42) | (42) | (43) | (42) | (129) | (127) |
Balance | 3,884 | 3,836 | 3,813 | 3,713 | 3,656 | 3,594 | 3,884 | 3,713 |
Non-Controlling Interests | ||||||||
Balance | 20 | 21 | 21 | 16 | 22 | 20 | 21 | 20 |
Net income | 3 | 1 | 3 | 3 | 2 | 2 | 7 | 7 |
Dividends declared, common stock | (2) | (3) | (2) | (4) | (5) | (6) | ||
Other comprehensive income (loss) | 1 | (3) | 2 | (4) | (2) | (2) | ||
Balance | $ 21 | $ 20 | $ 21 | $ 19 | $ 16 | $ 22 | $ 21 | $ 19 |
Equity - Statements of Redeemab
Equity - Statements of Redeemable Equity (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Increase (Decrease) in Temporary Equity | ||||||||
Share-based Payments Subject to Redemption, Beginning Balance | $ 27 | $ 23 | $ 31 | $ 25 | $ 21 | $ 37 | $ 31 | $ 37 |
Share-based compensation, net of issuance | 5 | 4 | (8) | 3 | 4 | (16) | 1 | (9) |
Share-based Payments Subject to Redemption, Ending Balance | 32 | $ 27 | $ 23 | $ 28 | $ 25 | $ 21 | 32 | $ 28 |
Net income (loss) attributable to non-controlling interests | (2) | (2) | ||||||
Acquisition of redeemable non-controlling interests | 74 | 74 | ||||||
Other comprehensive (loss) income | 2 | 2 | ||||||
Redeemable Non-Controlling Interests, Ending Balance | $ 74 | $ 74 |
Equity - EPS (Details)
Equity - EPS (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020 | Sep. 30, 2019 | Sep. 30, 2020 | Sep. 30, 2019 | |
Basic EPS: | ||||
Net Income Available to Ingredion - basic | $ 92 | $ 99 | $ 233 | $ 304 |
Weighted average number of shares outstanding, basic | 67.2 | 66.9 | 67.2 | 66.9 |
Basic earnings per common share of Ingredion (in dollars per share) | $ 1.37 | $ 1.48 | $ 3.47 | $ 4.54 |
Effect of Dilutive Securities: | ||||
Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards | 0.4 | 0.5 | 0.4 | 0.5 |
Diluted EPS: | ||||
Net Income Available to Ingredion - diluted | $ 92 | $ 99 | $ 233 | $ 304 |
Weighted Average Number of Shares Outstanding, Diluted, Total | 67.6 | 67.4 | 67.6 | 67.4 |
Diluted earnings per common share of Ingredion (in dollars per share) | $ 1.36 | $ 1.47 | $ 3.45 | $ 4.51 |
Antidilutive securities excluded in calculation of diluted EPS: | ||||
Antidilutive securities excluded from computation of earnings per share amount | 1.7 | 1.4 | 1.4 | 1.1 |
Segment Information - Net sales
Segment Information - Net sales (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2020USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2020USD ($)segment | Sep. 30, 2019USD ($) | |
Segment information | ||||
Number of reportable business segments | segment | 4 | |||
Total net sales | $ 1,502 | $ 1,574 | $ 4,394 | $ 4,660 |
Operating income Subtotal | 179 | 193 | 473 | 537 |
Restructuring/impairment charges | (16) | (28) | (41) | (41) |
Acquisition / integration costs | (5) | (8) | (2) | |
Charge for fair value markup of acquired inventory | (3) | (3) | ||
North America storm damage | (2) | (2) | ||
Operating income | 153 | 165 | 419 | 494 |
North America | ||||
Segment information | ||||
Total net sales | 928 | 984 | 2,739 | 2,912 |
South America | ||||
Segment information | ||||
Total net sales | 224 | 245 | 643 | 699 |
Asia-Pacific | ||||
Segment information | ||||
Total net sales | 207 | 205 | 583 | 611 |
EMEA | ||||
Segment information | ||||
Total net sales | 143 | 140 | 429 | 438 |
Operating Segments | North America | ||||
Segment information | ||||
Operating income Subtotal | 132 | 145 | 358 | 409 |
Operating Segments | South America | ||||
Segment information | ||||
Operating income Subtotal | 29 | 27 | 68 | 61 |
Operating Segments | Asia-Pacific | ||||
Segment information | ||||
Operating income Subtotal | 18 | 22 | 60 | 65 |
Operating Segments | EMEA | ||||
Segment information | ||||
Operating income Subtotal | 25 | 24 | 73 | 71 |
Corporate, Non -Segment | ||||
Segment information | ||||
Operating income Subtotal | $ (25) | $ (25) | $ (86) | $ (69) |
Segment Information - Assets (D
Segment Information - Assets (Details) - USD ($) $ in Millions | Sep. 30, 2020 | Dec. 31, 2019 |
Segment information | ||
Total assets | $ 6,464 | $ 6,040 |
North America | ||
Segment information | ||
Total assets | 4,072 | 3,924 |
South America | ||
Segment information | ||
Total assets | 676 | 774 |
Asia-Pacific | ||
Segment information | ||
Total assets | 1,193 | 843 |
EMEA | ||
Segment information | ||
Total assets | $ 523 | $ 499 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions, $ in Millions | Nov. 03, 2020CAD ($) | Sep. 30, 2020USD ($) | Sep. 30, 2020USD ($) | Dec. 31, 2018 |
Verdient Foods, Inc. | ||||
Subsequent Event | ||||
Percentage acquired | 20.00% | |||
Equity method investment, Other than temporary impairment | $ 10 | $ 10 | ||
Ownership percentage | 20.00% | 20.00% | ||
Subsequent Event. | Verdient Foods, Inc. | ||||
Subsequent Event | ||||
Additional percentage of outstanding shares acquired | 80.00% | |||
Cash consideration | $ 33 |