UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~September 30, 2014~~March 31, 2015

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

COMMISSION FILE NUMBER 1-13397

Ingredion Incorporated

(Exact name of Registrant as specified in its charter)

DELAWARE

(State or other jurisdiction of incorporation or organization)

22-3514823

(I.R.S. Employer Identification Number)

5 WESTBROOK CORPORATE CENTER
WESTCHESTER, ILLINOIS		60154
(Address of principal executive offices)		(Zip Code)

(708) 551-2600

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x

xNo o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x

xNo o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

(Check one):

Large accelerated filer x		Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.

CLASS		OUTSTANDING AT ~~October 29, 2014~~April 30, 2015
Common Stock, $.01 par value		~~71,863,000~~71,278,000 shares

PART I FINANCIAL INFORMATION

ITEM 1

FINANCIAL STATEMENTS

Ingredion Incorporated (“Ingredion”)

Condensed Consolidated Statements of Income

(Unaudited)

Three Months Ended
September 30,

Nine Months Ended
September 30,

Three Months Ended
March 31,

(In millions, except per share amounts)

2014

2013

2014

2013

2015

2014

Net sales before shipping and handling costs

1,544.8

1,695.8

4,547.8

5,073.7

1,410.0

1,435.0

Less: shipping and handling costs

84.5

84.1

247.7

244.7

79.9

77.8

Net sales

1,460.3

1,611.7

4,300.1

4,829.0

1,330.1

1,357.2

Cost of sales

1,162.7

1,352.9

3,456.8

3,988.5

1,049.4

1,107.4

Gross profit

297.6

258.8

843.3

840.5

280.7

249.8

Operating expenses

129.1

125.0

398.6

399.1

132.0

132.4

Other (income), net

(9.6

)

(3.1

)

(18.4

)

(10.7

)

(1.2

)

(4.9

)

Restructuring charge

10.4

—

Operating income

178.1

136.9

463.1

452.1

139.5

122.3

Financing costs, net

15.1

17.9

49.0

50.9

14.0

16.6

Income before income taxes

163.0

119.0

414.1

401.2

125.5

105.7

Provision for income taxes

42.6

30.7

113.9

104.1

39.8

30.5

Net income

120.4

88.3

300.2

297.1

85.7

75.2

Less: Net income attributable to non-controlling interests

1.8

2.0

6.4

4.9

2.0

2.6

Net income attributable to Ingredion

118.6

86.3

293.8

292.2

83.7

72.6

Weighted average common shares outstanding:

Basic

73.0

77.3

74.2

77.5

71.6

74.6

Diluted

74.3

78.6

75.5

78.8

72.7

75.8

Earnings per common share of Ingredion:

Basic

1.62

1.12

3.96

3.77

1.17

0.97

Diluted

1.60

1.10

3.89

3.71

1.15

0.96

See Notes to Condensed Consolidated Financial Statements

PART I FINANCIAL INFORMATION

ITEM 1

FINANCIAL STATEMENTS

Ingredion Incorporated (“Ingredion”)

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(In millions)	2014			2013			2014			2013			2015			2014
Net income	$	120		$	88		$	300		$	297		$	86		$	75
Other comprehensive income (loss):
Losses on cash-flow hedges, net of income tax effect of $23, $14, $21 and $25, respectively	(48		)	(29		)	(47		)	(54		)
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $5, $9, $11 and $4, respectively	11			18			24			10
Gains (losses) on cash-flow hedges, net of income tax effect of $6 and $13, respectively													(14		)	26
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $4 and $6, respectively													10			13
Actuarial gains on pension and postretirement obligations, settlements and plan amendments, net of income tax effect of $2													7			—
Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect	1			2			3			5			—			1
Unrealized gain on investment, net of income tax effect	—			—			—			1
Currency translation adjustment	(121		)	6			(116		)	(105		)	(146		)	(32		)
Comprehensive income (loss)	(37		)	85			164			154			(57		)	83
Comprehensive income attributable to non-controlling interests	(2		)	(2		)	(6		)	(5		)	(2		)	(3		)
Comprehensive income (loss) attributable to Ingredion	$	(39	)	$	83		$	158		$	149		$	(59	)	$	80

See Notes to Condensed Consolidated Financial Statements

PART I FINANCIAL INFORMATION

ITEM I - FINANCIAL STATEMENTS

Ingredion Incorporated (“Ingredion”)

Condensed Consolidated Balance Sheets

(In millions, except share and per share amounts)

September 30,
2014

December 31,
2013

March 31,
2015

December 31,
2014

(Unaudited)

Assets

Current assets

Cash and cash equivalents

565

574

573

580

Short-term investments

Accounts receivable — net

831

832

795

762

Inventories

722

723

740

699

Prepaid expenses

Deferred income taxes

Total current assets

2,216

2,214

2,226

2,144

Property, plant and equipment - net of accumulated depreciation of $2,836 and $2,776, respectively

2,095

2,156

Property, plant and equipment - net of accumulated depreciation of $2,759 and $2,813, respectively

2,090

2,073

Goodwill

520

535

573

478

Other intangible assets - net of accumulated amortization of $59 and $49, respectively

297

311

Other intangible assets - net of accumulated amortization of $65 and $62, respectively

398

290

Deferred income taxes

Investments

Other assets

113

118

128

102

Total assets

5,256

5,360

5,419

5,091

Liabilities and equity

Current liabilities

Short-term borrowings

Accounts payable and accrued liabilities

734

727

662

698

Total current liabilities

763

820

684

721

Non-current liabilities

152

163

196

157

Long-term debt

1,888

1,717

2,208

1,804

Deferred income taxes

202

207

203

180

Share-based payments subject to redemption

Equity

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 and 77,672,670 shares issued at September 30, 2014 and December 31, 2013, respectively

Common stock — authorized 200,000,000 shares- $0.01 par value — 77,810,875 shares issued at March 31, 2015 and December 31, 2014

Additional paid-in capital

1,107

1,166

1,163

1,164

Less: Treasury stock (common stock; 5,971,480 and 3,361,180 shares at September 30, 2014 and December 31, 2013, respectively) at cost

(431

)

(225

)

Less: Treasury stock (common stock; 6,494,373 and 6,488,605 shares at March 31, 2015 and December 31, 2014, respectively) at cost

(485

)

(481

)

Accumulated other comprehensive loss

(719

)

(583

)

(925

)

(782

)

Retained earnings

2,245

2,045

2,329

2,275

Total Ingredion stockholders’ equity

2,203

2,404

2,083

2,177

Non-controlling interests

Total equity

2,231

2,429

2,113

2,207

Total liabilities and equity

5,256

5,360

5,419

5,091

See Notes to Condensed Consolidated Financial Statements

PART I FINANCIAL INFORMATION

ITEM 1

FINANCIAL STATEMENTS

Ingredion Incorporated (“Ingredion”)

Condensed Consolidated Statements of Equity and Redeemable Equity

(Unaudited)

	Total Equity																	Share-based			Total Equity																	Share-based
(in millions)	Common Stock		Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Non- controlling Interests			Payments Subject to Redemption			Common Stock		Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Non- controlling Interests			Payments Subject to Redemption
Balance, December 31, 2013	$	1	$	1,166		$	(225	)	$	(583	)	$	2,045		$	25		$	24
Balance, December 31, 2014																					$	1	$	1,164		$	(481	)	$	(782	)	$	2,275		$	30		$	22
Net income attributable to Ingredion												294																				84
Net income attributable to non-controlling interests															6																				2
Dividends declared												(94		)	(3		)															(30		)	(2		)
Losses on cash-flow hedges, net of income tax effect of $21									(47		)
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $11									24
Losses on cash-flow hedges, net of income tax effect of $6																													(14		)
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $4																													10
Repurchases of common stock			(63		)	(241		)															(6		)	(18		)
Share-based compensation			4			35												(4		)			5			14												(7		)
Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect									3
Actuarial gains on pension and postretirement obligations, settlements, and plan amendments, net of income tax effect of $2																													7
Currency translation adjustment									(116		)																		(146		)
Balance, September 30, 2014	$	1	$	1,107		$	(431	)	$	(719	)	$	2,245		$	28		$	20
Balance, March 31, 2015																					$	1	$	1,163		$	(485	)	$	(925	)	$	2,329		$	30		$	15

	Total Equity																Share-based		Total Equity																Share-based
(in millions)	Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Non- controlling Interests			Payments Subject to Redemption		Common Stock		Additional Paid-In Capital		Treasury Stock			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Non-controlling Interests			Payments Subject to Redemption
Balance, December 31, 2012	$	1	$	1,148	$	(6	)	$	(475	)	$	1,769		$	22		$	19
Balance, December 31, 2013																			$	1	$	1,166	$	(225	)	$	(583	)	$	2,045		$	25		$	24
Net income attributable to Ingredion											292																		73
Net income attributable to non-controlling interests														5																		3
Dividends declared											(89		)	(4		)													(32		)	(2		)
Losses on cash-flow hedges, net of income tax effect of $25								(54		)
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $4								10
Repurchases of common stock					(56		)
Gains on cash-flow hedges, net of income tax effect of $13																										26
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $6																										13
Share-based compensation			17		2												2				5		5												(9		)
Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect								5																		1
Unrealized gain on investment, net of income tax effect								1
Currency translation adjustment								(105		)																(32		)
Balance, September 30, 2013	$	1	$	1,165	$	(60	)	$	(618	)	$	1,972		$	23		$	21
Balance, March 31, 2014																			$	1	$	1,171	$	(220	)	$	(575	)	$	2,086		$	26		$	15

See Notes to Condensed Consolidated Financial Statements

PART I FINANCIAL INFORMATION

ITEM 1

FINANCIAL STATEMENTS

Ingredion Incorporated (“Ingredion”)

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,						Three Months Ended March 31,
(In millions)	2014			2013			2015			2014
Cash provided by operating activities:
Net income	$	300		$	297		$	86		$	75
Non-cash charges to net income:
Depreciation and amortization	147			145			47			48
Charge for fair value mark-up of acquired inventory							3			—
Other							18			22
Changes in working capital:
Accounts receivable and prepaid items	(19		)	(86		)	(28		)	(8		)
Inventories	(15		)	61			(14		)	(35		)
Accounts payable and accrued liabilities	8			(137		)	(40		)	(12		)
Decrease (increase) in margin accounts	(11		)	11			(8		)	32
Other	52			71			5			(1		)
Cash provided by operating activities	462			362			69			121

Cash used for investing activities:
Payment for acquisition, net of cash acquired of $16							(332		)	—
Capital expenditures, net of proceeds on disposals	(187		)	(202		)	(58		)	(59		)
Proceeds from sale of investment	11			—
Short-term investments	(1		)	19			(3		)	—
Other	—			2
Cash used for investing activities	(177		)	(181		)	(393		)	(59		)

Cash used for financing activities:
Cash provided by (used for) financing activities:
Proceeds from borrowings	227			20			435			12
Payments on debt	(118		)	(50		)	(38		)	(46		)
Repurchases of common stock	(304		)	(56		)
Issuance of common stock	17			12
Repurchases of common stock, net of issuances							(21		)	(1		)
Dividends paid (including to non-controlling interests)	(97		)	(82		)	(32		)	(33		)
Excess tax benefit on share-based compensation	5			1			2			—
Cash used for financing activities	(270		)	(155		)
Cash provided by (used for) financing activities							346			(68		)

Effect of foreign exchange rate changes on cash	(24		)	(17		)	(29		)	(8		)
Increase (decrease) in cash and cash equivalents	(9		)	9
Decrease in cash and cash equivalents							(7		)	(14		)
Cash and cash equivalents, beginning of period	574			609			580			574
Cash and cash equivalents, end of period	$	565		$	618		$	573		$	560

See Notes to Condensed Consolidated Financial Statements

INGREDION INCORPORATED (“Ingredion”)

Notes to Condensed Consolidated 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, ~~2013.~~2014.

The unaudited condensed consolidated interim financial statements included herein were prepared by management on the same basis as the Company’s audited consolidated financial statements for the year ended December 31, ~~2013~~2014 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 results of operations and cash flows for the interim periods ended ~~September 30,~~March 31, 2015 and 2014, ~~and 2013,~~ and the financial position of the Company as of ~~September 30, 2014.~~March 31, 2015. The results for the interim periods are not necessarily indicative of the results expected for the full years.

2. New Accounting Standards

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2016, including interim periods within that reporting ~~period.~~period; however on April 29, 2015 the FASB proposed to delay the effective date by one year. The standard will allow various transition approaches upon adoption. The Company is assessing the impacts of this new standard; however the adoption of the guidance in this Update is not expected to have a material impact on the Company’s Condensed Consolidated Financial Statements.

In ~~July 2013,~~April 2015, the FASB issued ASU No. ~~2013-11,~~ ~~Income Taxes (Topic 740): Presentation~~2015-03, Interest-Imputation of ~~an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.~~ ~~This Update provides guidance pertaining to~~Interest (Subtopic 835-30), for the ~~financial statement~~purpose of simplifying the presentation of ~~an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists, to resolve diversity in practice. The Update~~debt issuance costs. This standard requires that ~~companies present an unrecognized tax benefit as~~debt issuance costs associated with a ~~reduction of a deferred tax asset for a tax loss or credit carryforward on~~recognized debt liability be presented in the balance sheet ~~when (a)~~as a direct reduction from the ~~tax law requires~~carrying amount of that debt in the ~~company to use~~balance sheet, consistent with the ~~tax loss or credit carryforward to satisfy amounts payable upon disallowance~~recording of the tax position; or (b) the tax loss or credit carryforward is available to satisfy amounts payable upon disallowance of the tax position, and the company intends to use the deferred tax asset for that purpose.debt discounts. The ~~guidance~~amendments in this Update isare effective ~~prospectively~~for financial statements issued for fiscal years beginning after December 15, ~~2013,~~2015, and interim periods within those fiscal ~~years.~~years and require an entity to apply the guidance on a retrospective basis. Early adoption of the amendments in this Update is permitted for financial statements that have not been previously issued. The ~~Company adopted~~adoption of the guidance in this Update ~~prospectively and the~~

~~adoption did~~is not expected to have a material impact on the Company’s Condensed Consolidated Financial Statements.

In8

3.Acquisition

On March ~~2013,~~11, 2015, the ~~FASB issued ASU No. 2013-05,~~ ~~Foreign Currency Matters (Topic 830): Parent’s Accounting~~Company completed its acquisition of Penford Corporation (“Penford”), a manufacturer of specialty starches that is headquartered in Centennial, Colorado. Total purchase consideration for Penford was $332 million, which included the extinguishment of $93 million in debt in conjunction with the acquisition. The Company funded the acquisition with proceeds from borrowings under its revolving credit agreement. The results of Penford are included in the Company’s consolidated results from March 11, 2015 forward within the North America operating segment.

The acquisition provides the Company with, among other things, an expanded specialty ingredient product portfolio consisting of potato starch-based offerings. Penford had net sales of $444 million for the ~~Cumulative Translation Adjustment upon Derecognition~~fiscal year ended August 31, 2014 and operated six manufacturing facilities in the United States, all of ~~Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity.~~ ~~This Update clarifies~~which manufacture specialty starches. With the ~~guidance pertaining~~acquisition, the Company now employs approximately 11,800 people world-wide.

Due to the ~~release~~timing of the ~~cumulative translation adjustment (“CTA”)~~completion of the acquisition so late in the Company’s fiscal quarter, a preliminary allocation of the purchase price to ~~resolve diversity~~the assets acquired and liabilities assumed was made based on available information and incorporating management’s best estimates. Assets acquired and liabilities assumed in ~~practice.~~the transaction were generally recorded at their estimated acquisition date fair values, while transaction costs associated with the acquisition were expensed as incurred. The ~~Update clarifies that when a company ceases~~Company is currently in the process of finalizing the valuation of the assets acquired and liabilities assumed, primarily related to ~~have a controlling financial interest in a subsidiary or group~~the valuation of tangible and identifiable intangible assets ~~that is a business within a foreign entity,~~acquired. As such, the ~~company should release any related CTA into net income. In such instances,~~actual allocation of the ~~CTA should be released into~~final purchase price and the resulting effect on net income ~~only if a sale or transfer~~may differ from the preliminary amounts included herein. The Company expects to finalize the purchase price allocation during 2015.

Goodwill represents the amount by which the purchase price exceeds the estimated fair value of the net assets acquired, and is not tax deductible for the Company. The preliminary goodwill of $107 million results from synergies and other operational benefits expected to result from the acquisition.

The following table summarizes the preliminary purchase price allocation as of March 11, 2015 for the acquisition of Penford:

(in millions)
Working capital (excluding cash)	$	66
Property, plant and equipment	110
Other assets	9
Identifiable intangible assets	116
Goodwill	107
Non-current liabilities assumed	(76		)
Total preliminary purchase price	$	332

The identifiable intangible assets include items such as customer relationships, proprietary technology and tradenames.

Included in the ~~complete or substantially complete liquidation~~results from the acquired Penford business was an increase in cost of ~~the foreign entity in which the subsidiary or group~~sales of ~~assets had resided. The Update also requires the release of the CTA (or applicable pro rata portion thereof) upon~~$3 million relating to the sale ~~or partial sale~~ of ~~an equity method investment~~Penford inventory that iswas adjusted to fair value at the acquisition date in accordance with business combination accounting rules. The Company also

recorded a ~~foreign entity~~pre-tax restructuring charge of $10 million for estimated employee severance costs. In addition, the Company incurred $4 million of pre-tax acquisition and for a step acquisition in which the acquirer held an equity method investment prior to obtaining control. The guidance in this Update is effective prospectively for fiscal years beginning after December 15, 2013, and interim periods within those fiscal years. The adoption of the guidance contained in this Update did not have an impact on the Company’s 2014 Condensed Consolidated Financial Statements. However, the guidance contained in this Update will impact the accountingintegration costs for the ~~CTA upon any future de-recognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity; and~~three months ended March 31, 2015 associated with the ~~effect will be dependent upon the relevant transaction at that time.~~Penford transaction.

3.4. Segment Information

The Company is principally engaged in the production and sale of starches and sweeteners for a wide range of industries, and is managed geographically on a regional basis. The Company’s operations are classified into four reportable business segments: North America, South America, Asia Pacific and Europe, ~~the~~ Middle East and Africa (“EMEA”). ~~The~~Its North America segment includes businesses in the United States, Canada and Mexico. The Company’s South America segment includes businesses in Brazil, Colombia and Ecuador ~~Peru~~ and the Southern Cone of South America, which includes Argentina, Chile, Peru and Uruguay. ~~The~~Its Asia Pacific segment includes businesses in Korea, Thailand, Malaysia, China, Japan, Indonesia, the Philippines, Singapore, India, Australia and New Zealand. The Company’s EMEA segment includes businesses in the United Kingdom, Germany, South Africa, Pakistan and Kenya.

	Three Months Ended March 31,
(in millions)	2015			2014
Net Sales to unaffiliated customers:
North America	$	754.0		$	736.9
South America	258.1			293.8
Asia Pacific	186.9			185.4
EMEA	131.1			141.1
Total	$	1,330.1		$	1,357.2

Operating Income:
North America	$	102.1		$	65.2
South America	24.6			29.9
Asia Pacific	25.6			25.7
EMEA	22.1			21.1
Corporate	(17.8		)	(19.6		)
Sub-total	156.6			122.3
Restructuring charge	(10.4		)	—
Acquisition/integration costs	(3.7		)	—
Charge for fair value markup of acquired inventory	(3.0		)	—
Total	$	139.5		$	122.3

910

Three Months Ended
September 30,

Nine Months Ended
September 30,

(in millions)

2014

2013

2014

2013

Net Sales

North America

$
805.6

$
948.7

$
2,362.0

$
2,835.3

South America

307.6

322.8

906.2

992.3

Asia Pacific

205.8

204.8

594.3

600.5

EMEA

141.3

135.4

437.6

400.9

Total

$
1,460.3

$
1,611.7

$
4,300.1

$
4,829.0

Operating Income

North America

$
113.1

$
96.6

$
288.7

$
308.2

South America

27.4

18.8

73.8

79.5

Asia Pacific

27.0

23.6

80.1

70.2

EMEA

22.2

17.4

68.7

53.6

Corporate (a)

(11.6
)
(19.5
)
(48.2
)
(59.4
)
Total

$
178.1

$
136.9

$
463.1

$
452.1

~~(a)~~Includes $7 million of income relating to a tax indemnification agreement with an offsetting expense of $7 million recorded in the provision for income taxes for the three months and nine months ended September 30, 2014 (see also Note 11). Additionally, includes a $5 million gain from the sale of a non-consolidated affiliate and $4 million of costs relating to product liability claims for the nine months ended September 30, 2014.

(in millions)	At September 30, 2014		At December 31, 2013		At March 31, 2015		At Dec. 31, 2014
Total Assets
North America	$	2,964	$	3,008	$	3,365	$	2,907
South America	1,014		1,088		807		923
Asia Pacific	740		711		735		711
EMEA	538		553		512		550
Total	$	5,256	$	5,360	$	5,419	$	5,091

4.5. 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 clear controls on these activities. These transactions utilize exchange-traded derivatives or over-the-counter derivatives with investment grade counterparties. Derivative financial instruments currently used by the Company consist of commodity futures, options and swap contracts, foreign currency forward contracts and swaps, and interest rate swaps.

Commodity price hedging: The Company’s principal use of derivative financial instruments is to manage commodity price risk in North America relating to anticipated purchases of corn and natural gas to be used in the manufacturing process, generally over the

next twelve to twenty-four months. To manage price risk related to corn purchases in North America, the Company uses corn futures and options contracts that trade on regulated commodity exchanges to lock-in its corn costs associated with firm-priced customer sales contracts. The Company uses over-the-counter gas swaps to hedge a portion of its natural gas usage in North America. These derivative financial instruments limit the impact that volatility resulting from fluctuations in market prices will have on corn and natural gas purchases and have been designated as cash-flow hedges. Effective with the acquisition of Penford, the Company now produces and sells ethanol. The Company now enters into swap contracts to hedge price risk associated with fluctuations in market prices of ethanol. Unrealized gains and losses associated with marking the commodity hedging contracts to market (fair value) are recorded as a component of other comprehensive income (“OCI”) and included in the equity section of the Condensed Consolidated Balance Sheets as part of accumulated other comprehensive income/loss (“AOCI”). These amounts are subsequently reclassified into earnings in the same line item affected by the hedged transaction and in the same period or periods during which the hedged transaction affects earnings, or in the month a hedge is determined to be ineffective. The Company assesses the effectiveness of a commodity hedge contract based on changes in the contract’s fair value. The changes in the market value of such contracts have historically been, and are expected to continue to be, highly effective at offsetting changes in the price of the hedged items. The amounts representing the ineffectiveness of these cash-flow hedges are not significant.

At ~~September 30, 2014,~~March 31, 2015, AOCI included ~~$57~~$19 million of losses, net of tax of ~~$26~~$9 million, pertaining to commodities-related derivative instruments designated as cash-flow hedges. At December 31, ~~2013,~~2014, AOCI included ~~$32~~$13 million of losses, net of tax of ~~$15~~$6 million, pertaining to commodities-related derivative instruments designated as cash-flow hedges.

Interest rate hedging: Derivative financial instruments that have been used by the Company to manage its interest rate risk consist of Treasury Lock agreements (“T-Locks”) and interest rate swaps. The Company did not have any ~~T-Locks~~T-locks outstanding at ~~September 30, 2014~~March 31, 2015 or December 31, ~~2013.~~

~~In September 2014, the~~2014. The Company ~~entered into~~has interest rate swap agreements that effectively convert the interest rates on its 3.2 percent $350 million senior notes due November 1, 2015, its 6.0 percent $200 million senior notes due April 15, 2017, its 1.8 percent $300 million senior notes due September 25, 2017 and on $200 million of its $400 million 4.625 percent senior notes due November 1, 2020, to variable rates. ~~Additionally, the Company has interest rate swap agreements that effectively convert the interest rate on its 3.2 percent $350 million senior notes due November 1, 2015 to a variable rate.~~ These swap agreements call for the Company to receive interest at the fixed coupon rate of the respective notes and to pay interest at a variable rate based on the six-month US dollar LIBOR rate plus a spread. The Company has designated these interest rate swap agreements as hedges of the changes in fair value of the underlying debt obligations attributable to changes in interest rates and accounts for them as fair-value hedges. Changes in the fair value of interest rate swaps designated as hedging instruments that effectively offset the variability in the fair value of outstanding debt obligations are reported in earnings. These amounts offset the gain or loss (that is, the change in fair value) of the hedged debt ~~instruments~~instrument that ~~are~~is attributable to changes in interest rates (that is, the hedged risk), which is also recognized in earnings. The fair value of these interest rate swap agreements at ~~September 30, 2014~~March 31, 2015 and December 31, ~~2013~~2014 was $8$21 million and $13 million, respectively and is reflected in the Condensed Consolidated Balance Sheets within other assets, with an offsetting amount recorded in long-term debt to adjust the carrying amount of the hedged debt obligations.

At ~~September 30,~~March 31, 2015 and December 31, 2014, AOCI included $6 million of losses (net of income taxes of $4 million) and $7 million of losses (net of income taxes of $4 million) ~~related to settled T-Locks. At December 31, 2013, AOCI included $8 million of losses (net of income taxes of $5 million)~~, respectively, related to settled T-Locks. These deferred losses are being amortized to financing costs over the terms of the senior notes with which they are associated.

Foreign currency hedging: Due to the Company’s global operations, including ~~many~~ operations in many emerging markets, it is exposed to fluctuations in foreign currency exchange rates. As a result, the Company has exposure to translational foreign exchange risk when the results of its foreign ~~operation results~~operations are translated to US dollars and to transactional foreign exchange risk when transactions not denominated in the functional currency of ~~the~~a foreign operating unit are revalued. The Company primarily uses derivative financial instruments such as foreign currency forward contracts, swaps and options to manage its transactional foreign exchange risk. At ~~September 30,~~March 31, 2015, the Company had foreign currency forward sales contracts with an aggregate notional amount of $141 million and foreign currency forward purchase contracts with an aggregate notional amount of $59 million that hedged transactional exposures. At December 31, 2014, the Company had foreign currency forward sales contracts with an aggregate notional amount of ~~$101~~$150 million and foreign currency forward purchase contracts with an aggregate notional amount of $57 million that hedged transactional exposures. At December 31, 2013, the Company had foreign currency forward sales contracts with an aggregate notional amount of $147 million and foreign currency forward purchase contracts with an aggregate notional amount of $78$70 million that hedged transactional exposures. The fair value of these derivative instruments ~~were~~are assets of $5 million and $1 million at ~~September 30, 2014~~March 31, 2015 and ~~liabilities of $5 million at~~ December 31, ~~2013,~~2014, respectively.

The Company also has ~~certain~~ foreign currency derivative instruments that hedge certain foreign currency transactional exposures and are designated as cash-flow hedges. AtThe amount included in AOCI relating to these hedges at both ~~September 30, 2014~~March 31, 2015 and December 31, ~~2013, AOCI included $1 million of gains, net of income taxes, associated with these hedges.~~2014 was not significant.

The fair value and balance sheet location of the Company’s derivative instruments, accounted for as cash-flow hedges and presented gross onin the Condensed Consolidated Balance Sheets, are reflected below:

Fair Value of Derivative Instruments

Derivatives designated as

Fair Value

Fair Value

cash-flow hedging
instruments:
(in millions)

Balance Sheet
Location

At
Sept. 30,
2014

At
December 31,
2013

Balance Sheet
Location

At
Sept. 30,
2014

At
December 31,
2013

Commodity and foreign currency contracts

Accounts receivable-net

$
3

$
2

Accounts payable and accrued liabilities

$
44

$
27

Commodity and foreign currency contracts

Other assets

—

5

Non-current liabilities

6

—

Total

$
3

$
7

$
50

$
27

	Fair Value of Derivative Instruments
Derivatives designated as		Fair Value					Fair Value
cash-flow hedging instruments: (in millions)	Balance Sheet Location	At March 31, 2015		At December 31, 2014		Balance Sheet Location	At March 31, 2015		At December 31, 2014

Commodity and foreign currency contracts	Accounts receivable-net	$	7	$	15	Accounts payable and accrued liabilities	$	24	$	18

Commodity and foreign currency contracts	Other assets	—		1		Non-current liabilities	10		6
Total		$	7	$	16		$	34	$	24

At ~~September 30, 2014,~~March 31, 2015, the Company had outstanding futures and option contracts that hedged the forecasted purchase of approximately 6979 million bushels of ~~corn. Additionally at September 30, 2014, the Company had outstanding swap~~corn and ~~option contracts that hedged the forecasted purchase~~600 thousand pounds of ~~approximately 14 million mmbtu’s of natural gas.~~soybean oil. The Company is unable to directly hedge price risk related to co-product sales; however, it occasionally enters

into hedges of soybean oil (a competing product to corn oil) in order to mitigate the price risk of corn oil sales. The Company also had ~~no soybean oil hedges~~outstanding swap and option contracts that hedged the forecasted purchase of approximately 17 million mmbtu’s of natural gas at ~~September 30, 2014.~~March 31, 2015. Additionally at March 31, 2015, the Company had outstanding ethanol swap contracts that hedged the forecasted sale of approximately 3 million gallons of ethanol.

Additional information relating to the Company’s derivative instruments is presented below (in millions, pre-tax):

Amount of Gains (Losses)
Recognized in OCI
on Derivatives

Location of

Amount of Gains (Losses)
Reclassified from AOCI
into Income

Derivatives in
Cash-Flow
Hedging
Relationships

Three Months
Ended
September 30,
2014

Three Months
Ended
September 30,
2013

Gains (Losses)
Reclassified
from AOCI into
Income

Three Months
Ended
September 30,
2014

Three Months
Ended
September 30,
2013

Commodity and foreign currency contracts

$
(71
)
$
(43
)
Cost of sales

$
(15
)
$
(26
)
Interest rate contracts

—

—

Financing costs, net

(1
)
(1
)
Total

$
(71
)
$
(43
)

$
(16
)
$
(27
)

	Amount of Gains (Losses) Recognized in OCI on Derivatives						Location of	Amount of Gains (Losses) Reclassified from AOCI into Income
Derivatives in Cash-Flow Hedging Relationships	Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013			Gains (Losses) Reclassified from AOCI into Income	Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
Derivatives in														Amount of Gains (Losses) Recognized in OCI on Derivatives					Location of Gains (Losses)	Amount of Gains (Losses) Reclassified from AOCI into Income
Cash-Flow Hedging Relationships														Three Months Ended March 31, 2015			Three Months Ended March 31, 2014		Reclassified from AOCI into Income	Three Months Ended March 31, 2015			Three Months Ended March 31, 2014
Commodity and foreign currency contracts	$	(68	)	$	(79	)	Cost of sales	$	(33	)	$	(12	)	$	(20	)	$	39	Cost of sales	$	(13	)	$	(18	)
Interest rate contracts	—			—			Financing costs, net	(2		)	(2		)	—			—		Financing costs, net	(1		)	(1		)
Total	$	(68	)	$	(79	)		$	(35	)	$	(14	)	$	(20	)	$	39		$	(14	)	$	(19	)

At ~~September 30, 2014,~~March 31, 2015, AOCI included approximately ~~$52~~$18 million of losses, net of income taxes of ~~$25~~$9 million, on commodities-related derivative instruments designated as cash-flow hedges that are expected to be reclassified into earnings during the next twelve months. The Company expects the losses to be offset by changes in the underlying commodities cost. Additionally at ~~September 30, 2014,~~March 31, 2015, AOCI included $2 million of losses on settled T-Locks (net of income taxes of $1 million) and ~~$0.2~~$1 million of gains related to foreign currency hedges (net of income ~~taxes)~~taxes of $1 million), which are expected to be reclassified into earnings during the next twelve months.

Presented below are the fair values of the Company’s financial instruments and derivatives for the periods presented:

	At September 30, 2014								At December 31, 2013								At March 31, 2015								At December 31, 2014
(in millions)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Available for sale securities	$	4	$	4	$	—	$	—	$	4	$	4	$	—	$	—	$	5	$	5	$	—	$	—	$	5	$	5	$	—	$	—
Derivative assets	12		—		12		—		20		—		20		—		34		2		32		—		29		12		17		—
Derivative liabilities	50		46		4		—		32		22		10		—		35		13		22		—		23		6		17		—
Long-term debt	2,009		—		2,009		—		1,813		—		1,813		—		2,352		—		2,352		—		1,939		—		1,939		—

Level 1 inputs consist of quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 inputs are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability or can be derived principally from or corroborated by observable market data. Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs shall be used to measure fair value to the extent that observable inputs are not available, thereby allowing for 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. At ~~September 30, 2014,~~March 31, 2015, the carrying value and fair value of the Company’s long-term debt were ~~$1.89~~$2.21 billion and ~~$2.01~~$2.35 billion, respectively.

5. 6. Share-Based Compensation

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 recognized on a straight-line basis for all awards.

The Company granted non-qualified options to purchase ~~715~~336 thousand shares and ~~416~~710 thousand shares of the Company’s common stock during the ~~nine~~three months ended ~~September 30,~~March 31, 2015 and 2014, ~~and 2013,~~ respectively. The fair value of each option grant was estimated using the Black-Scholes option-pricing model with the following assumptions:

	For the Nine Months Ended September 30,				For the Three Months Ended March 31,
	2014		2013		2015		2014
Expected life (in years)	5.5		5.8		5.5		5.5
Risk-free interest rate	1.63	%	1.11	%	1.36	%	1.63	%
Expected volatility	30.28	%	32.64	%	25.19	%	30.28	%
Expected dividend yield	2.82	%	1.57	%	2.04	%	2.82	%

The expected life of options represents the weighted-average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and the

Company’s historical exercise patterns. The risk-free interest rate is based on the US Treasury yield curve in effect at the 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 yields are based on historical dividend payments.

Stock option activity for the ~~nine~~three months ended ~~September 30, 2014~~March 31, 2015 was as follows:

(dollars and options in thousands, except per share amounts)	Number of Options		Weighted Average Exercise Price per Share		Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value		Number of Options		Weighted Average Exercise Price per Share		Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2013	2,849		$	40.77
Outstanding at December 31, 2014								2,889		$	46.84
Granted	715		59.65					336		82.28
Exercised	(523	)	33.37					(90	)	41.00
Cancelled	(48	)	51.66					(8	)	60.67
Outstanding at September 30, 2014	2,993		46.40		6.34	$	87,961
Outstanding at March 31, 2015								3,127		50.77		6.33	$	86,057

Exercisable at September 30, 2014	1,938		38.63		4.93	$	72,008
Exercisable at March 31, 2015								2,210		43.31		5.25	$	76,262

For the ~~nine~~three months ended ~~September 30, 2014,~~March 31, 2015, cash received from the exercise of stock options was ~~$17~~$3 million. At ~~September 30, 2014,~~March 31, 2015, the total remaining unrecognized compensation cost related to stock options approximated ~~$11~~$12 million, which will be amortized over ~~the~~a weighted-average period of approximately ~~2.0~~2.1 years.

Additional information pertaining to stock option activity is as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
(dollars in thousands, except per share)	2014		2013		2014		2013		2015		2014
Weighted average grant date fair value of stock options granted (per share)	$	—	$	—	$	12.99	$	17.87	$	16.04	$	12.97
Total intrinsic value of stock options exercised	$	6,416	$	2,686	$	21,339	$	17,338	$	3,740	$	2,775

Restricted Shares of Common Stock and Restricted Stock Units:

The Company has granted shares of restricted common stock (“RSAs”) and restricted stock units (“RSUs”) to certain key employees. The RSAs and RSUs are subject to cliff vesting, generally after three to five years provided the employee remains in the service of the Company. The fair value of the RSAs and RSUs is determined based upon the number of shares granted and the quoted market price of the Company’s common stock at the date of the grant.

The following table summarizes RSA and RSU activity for the ~~nine~~three months ended ~~September 30, 2014:~~March 31, 2015:

RSAs

RSUs

(in thousands, except per share
amounts)

Number of
RSAs

Weighted
Average
Fair Value
per Share

Number of
RSUs

Weighted
Average
Fair Value
per Share

Non-vested at December 31, 2013

48

$
26.25

469

$
54.47

Granted

—

—

158

61.29

Vested

(31
)
25.35

(161
)
48.48

Cancelled

(1
)
28.75

(23
)
54.74

Non-vested at September 30, 2014

16

27.94

443

59.09

	RSAs				RSUs
(in thousands, except per share amounts)	Number of RSAs		Weighted Average Fair Value per Share		Number of RSUs		Weighted Average Fair Value per Share
Non-vested at December 31, 2014	16		$	27.94	434		$	59.61
Granted	—		—		145		82.33
Vested	(14	)	28.75		(127	)	56.41
Cancelled	—		—		(4	)	61.38
Non-vested at March 31, 2015	2		21.42		448		67.85

At ~~September 30, 2014,~~March 31, 2015, the total remaining unrecognized compensation cost related to RSUs was ~~$13~~$20 million, which will be amortized over a weighted-average period of approximately ~~2.0~~2.4 years. Unrecognized compensation cost related to RSAs was insignificant at ~~September 30, 2014.~~March 31, 2015.

The following table summarizes the components of the Company’s share-based compensation expense:

	Three Months Ended						Nine Months Ended						Three Months Ended
	September 30,						September 30,						March 31,
(in millions)	2014			2013			2014			2013			2015			2014
Stock options:
Pre-tax compensation expense	$	1.7		$	1.5		$	5.4		$	4.7		$	1.8		$	1.9
Income tax (benefit)	(0.5		)	(0.5		)	(1.6		)	(1.4		)
Income tax benefit													(0.7		)	(0.7		)
Stock option expense, net of income taxes	1.2			1.0			3.8			3.3			1.1			1.2

RSUs, RSAs and other share-based awards:
RSUs, RSAs and other share-based compensation:
Pre-tax compensation expense	3.0			2.7			8.7			8.4			3.3			2.7
Income tax (benefit)	(0.9		)	(0.8		)	(2.5		)	(2.5		)
RSU, RSA and other share-based compensation expense, net of income taxes	2.1			1.9			6.2			5.9
Income tax benefit													(1.2		)	(1.0		)
RSUs, RSAs and other share-based compensation expense, net of income taxes													2.1			1.7

Total share-based compensation:
Pre-tax compensation expense	4.7			4.2			14.1			13.1			5.1			4.6
Income tax (benefit)	(1.4		)	(1.3		)	(4.1		)	(3.9		)
Income tax benefit													(1.9		)	(1.7		)
Total share-based compensation expense, net of income taxes	$	3.3		$	2.9		$	10.0		$	9.2		$	3.2		$	2.9

6.7. Net Periodic Pension and Postretirement Benefit Costs

For detailed information about the Company’s pension and postretirement benefit plans, please refer to Note 89 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, ~~2013.~~2014.

The following table sets forth the components of net periodic benefit cost of the US and non-US defined benefit pension plans for the periods presented:

Three Months
Ended September 30,

Nine Months
Ended September 30,

US Plans

Non-US Plans

US Plans

Non-US Plans

(in millions)

2014

2013

2014

2013

2014

2013

2014

2013

Service cost

$
1.8

$
2.0

$
1.5

$
2.3

$
5.3

$
5.9

$
4.4

$
7.0

Interest cost

3.3

2.8

3.7

3.0

9.8

8.5

11.1

9.2

Expected return on plan assets

(5.2
)
(4.6
)
(3.6
)
(2.9
)
(15.7
)
(13.7
)
(10.7
)
(8.9
)
Amortization of net actuarial loss

0.1

0.5

0.8

1.2

0.3

1.4

2.4

3.7

Amortization of prior service credit

—

—

—

—

—

—

(0.1
)
(0.1
)
Amortization of transition obligation

—

—

0.1

0.1

—

—

0.2

0.2

Settlement

0.4

—

—

—

0.4

—

—

—

Net pension cost

$
0.4

$
0.7

$
2.5

$
3.7

$
0.1

$
2.1

$
7.3

$
11.1

	Three Months Ended March 31,
	US Plans						Non-US Plans
(in millions)	2015			2014			2015			2014
Service cost	$	1.9		$	1.8		$	1.2		$	1.5
Interest cost	3.2			3.3			3.0			3.6
Expected return on plan assets	(5.5		)	(5.2		)	(3.4		)	(3.5		)
Amortization of net actuarial loss	0.2			0.1			0.6			0.8
Amortization of transition obligation	—			—			0.1			0.1
Net pension cost (benefit)	$	(0.2	)	$	—		$	1.5		$	2.5

The Company currently anticipates that it will make approximately ~~$18~~$10 million in cash contributions to its pension plans in ~~2014,~~2015, consisting of $6$8 million to its US pension plans and ~~$12~~$2 million to its non-US pension plans. For the ~~nine~~three months ended ~~September 30, 2014, the Company made~~March 31, 2015, cash contributions of approximately $5$0.5 million ~~and $8 million~~were made to ~~its~~the non-US plans. No cash contributions were made to the US ~~and non-US~~plans during the first quarter of 2015.

During the first quarter of 2015, the Company amended one of our pension plans ~~respectively.~~in Canada to eliminate future benefit accruals for the plan effective April 30, 2015. This plan curtailment resulted in an improvement in the funded status of the plan by approximately $9 million in the first quarter. The impact of this plan curtailment on net periodic benefit cost for the first quarter of 2015 was not significant.

The following table sets forth the components of net postretirement benefit cost for the periods presented:

	Three Months Ended Sept. 30,					Nine Months Ended Sept. 30,					Three Months Ended March 31,
(in millions)	2014		2013			2014		2013			2015			2014
Service cost	$	0.7	$	0.7		$	2.1	$	2.3		$	0.2		$	0.7
Interest cost	0.9		0.9			2.7		2.8			0.7			0.9
Amortization of prior service cost	—		—			—		0.1
Amortization of net actuarial loss	0.1		0.2			0.3		0.8			0.1			0.1
Curtailment	—		(0.3		)	—		(0.3		)
Amortization of prior service credit											(0.5		)	—
Net postretirement benefit cost	$	1.7	$	1.5		$	5.1	$	5.7		$	0.5		$	1.7

7.8. Earnings per Common Share

The following table provides the computation of basic and diluted earnings per common share (“EPS”) for the periods presented.

Three Months Ended September 30, 2014

Three Months Ended September 30, 2013

Net Income

Net Income

Available

Weighted

Available

Weighted

to Ingredion

Average Shares

Per Share

to Ingredion

Average Shares

Per Share

(in millions, except per share amounts)

(Numerator)

(Denominator)

Amount

(Numerator)

(Denominator)

Amount

Basic EPS

$
118.6

73.0

$
1.62

$
86.3

77.3

$
1.12

Effect of Dilutive Securities:

Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs, RSAs and other awards

1.3

1.3

Diluted EPS

$
118.6

74.3

$
1.60

$
86.3

78.6

$
1.10

Nine Months Ended September 30, 2014

Nine Months Ended September 30, 2013

Net Income

Net Income

Available

Weighted

Available

Weighted

to Ingredion

Average Shares

Per Share

to Ingredion

Average Shares

Per Share

(in millions, except per share amounts)

(Numerator)

(Denominator)

Amount

(Numerator)

(Denominator)

Amount

Basic EPS

$
293.8

74.2

$
3.96

$
292.2

77.5

$
3.77

Effect of Dilutive Securities:

Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs, RSAs and other awards

1.3

1.3

Diluted EPS

$
293.8

75.5

$
3.89

$
292.2

78.8

$
3.71

For the first nine months of 2014, options to purchase approximately 0.4 million shares of common stock were excluded from the calculation of diluted EPS as the impact of their inclusion would have been anti-dilutive. The number of anti-dilutive options excluded from the calculation of diluted EPS for the third quarter of 2014 was not material. For both the third quarter and first nine months of 2013, options to purchase approximately 0.4 million shares of common stock were excluded from the calculation of diluted EPS as the impact of their inclusion would have been anti-dilutive.

	Three Months Ended March 31, 2015					Three Months Ended March 31, 2014
	Net Income					Net Income
	Available		Weighted			Available		Weighted
	to Ingredion		Average Shares	Per Share		to Ingredion		Average Shares	Per Share
(in millions, except per share amounts)	(Numerator)		(Denominator)	Amount		(Numerator)		(Denominator)	Amount

Basic EPS	$	83.7	71.6	$	1.17	$	72.6	74.6	$	0.97

Effect of Dilutive Securities:

Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs, RSAs and other awards			1.1					1.2

Diluted EPS	$	83.7	72.7	$	1.15	$	72.6	75.8	$	0.96

8.9. Inventories

Inventories are summarized as follows:

(in millions)	At September 30, 2014		At December 31, 2013		At March 31, 2015		At December 31, 2014
Finished and in process	$	437	$	440	$	440	$	428
Raw materials	240		235		252		225
Manufacturing supplies and other	45		48		48		46
Total inventories	$	722	$	723	$	740	$	699

10.Debt

The Company’s long-term debt at March 31, 2015 and December 31, 2014 includes $350 million of 3.2 percent senior notes that mature November 1, 2015. These borrowings are included in long-term debt as the Company has the ability and intent to refinance the notes on a long-term basis prior to the maturity date.

Borrowings outstanding under the Company’s $1 billion Revolving Credit Agreement were $483 million and $87 million at March 31, 2015 and December 31, 2014, respectively. The increase primarily reflects borrowings to fund the acquisition of Penford.

9.11. Accumulated Other Comprehensive Loss

A summary of accumulated other comprehensive loss for the ~~nine~~three months ended ~~September 30,~~March 31, 2015 and 2014 ~~and 2013~~ is provided below:

Deferred

Unrealized

Accumulated

Cumulative

Gain/(Loss)

Pension/

Loss

Other

Translation

on Hedging

Postretirement

on

Comprehensive

(in millions)

Adjustment

Activities

Adjustment

Investment

Loss

Balance, December 31, 2013

$
(489
)
$
(40
)
$
(53
)
$
(1
)
$
(583
)
Losses on cash-flow hedges, net of income tax effect of $21

(47
)

(47
)
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $11

24

24

Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect

3

3

Currency translation adjustment

(116
)

(116
)
Balance, September 30, 2014

$
(605
)
$
(63
)
$
(50
)
$
(1
)
$
(719
)

				Deferred						Unrealized			Accumulated
	Cumulative			Gain/(Loss)			Pension/			Loss			Other
	Translation			on Hedging			Postretirement			on			Comprehensive
(in millions)	Adjustment			Activities			Adjustment			Investment			Loss
Balance, December 31, 2014	$	(701	)	$	(19	)	$	(61	)	$	(1	)	$	(782	)
Losses on cash-flow hedges, net of income tax effect of $6				(14		)							(14		)
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $4				10									10
Actuarial gains on pension and postretirement obligations, settlements and plan amendments, net of income tax effect of $2							7						7
Currency translation adjustment	(146		)										(146		)
Balance, March 31, 2015	$	(847	)	$	(23	)	$	(54	)	$	(1	)	$	(925	)

Deferred

Unrealized

Accumulated

Cumulative

Gain/(Loss)

Pension/

Loss

Other

Translation

on Hedging

Postretirement

on

Comprehensive

(in millions)

Adjustment

Activities

Adjustment

Investment

Loss

Balance, December 31, 2012

$
(335
)
$
(17
)
$
(121
)
$
(2
)
$
(475
)
Losses on cash-flow hedges, net of income tax effect of $25

(54
)

(54
)
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $4

10

10

Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect

5

5

Unrealized gain on investment, net of income tax effect

1

1

Currency translation adjustment

(105
)

(105
)
Balance, September 30, 2013

$
(440
)
$
(61
)
$
(116
)
$
(1
)
$
(618
)

				Deferred						Unrealized			Accumulated
	Cumulative			Gain/(Loss)			Pension/			Loss			Other
	Translation			on Hedging			Postretirement			on			Comprehensive
(in millions)	Adjustment			Activities			Adjustment			Investment			Loss
Balance, December 31, 2013	$	(489	)	$	(40	)	$	(53	)	$	(1	)	$	(583	)
Gains on cash-flow hedges, net of income tax effect of $13				26									26
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of $6				13									13
Losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect							1						1
Currency translation adjustment	(32		)										(32		)
Balance, March 31, 2014	$	(521	)	$	(1	)	$	(52	)	$	(1	)	$	(575	)

The following table provides detail pertaining to reclassifications from AOCI into net income for the periods presented:

	Amount Reclassified from AOCI
	Three Months ended						Nine Months ended						Affected Line Item in	Amount Reclassified from AOCI
Details about AOCI Components	September 30,						September 30,						Condensed Consolidated	Three Months ended March 31,				Affected Line Item in Condensed Consolidated
(in millions)	2014			2013			2014			2013			Statements of Income	2015		2014		Statements of Income

Losses on cash-flow hedges:
Commodity and foreign currency contracts	$	(15	)	$	(26	)	$	(33	)	$	(12	)	Cost of sales	(13	)	(18	)	Cost of sales
Interest rate contracts	(1		)	(1		)	(2		)	(2		)	Financing costs, net	(1	)	(1	)	Financing costs, net

Losses related to pension and other postretirement obligations	(1		)	(2		)	(4		)	(6		)	(a)	—		(1	)	(a)

Total before tax reclassifications	$	(17	)	$	(29	)	$	(39	)	$	(20	)		(14	)	(20	)
Income tax benefit	5			9			12			5				4		6
Total after-tax reclassifications	$	(12	)	$	(20	)	$	(27	)	$	(15	)		(10	)	(14	)

(a) This component is included in the computation of net periodic benefit cost and affects both cost of sales and operating expenses on the Condensed Consolidated Statements of Income.

~~10.~~~~Accelerated Share Repurchase Agreement~~

As part of the stock repurchase program, the Company entered into an accelerated share repurchase agreement (“ASR”) on July 30, 2014 with an investment bank under which the Company repurchased $300 million of its common stock. The Company paid the $300 million on August 1, 2014 and received an initial delivery of shares from the investment bank of approximately 3.2 million shares, representing approximately 80 percent of the shares anticipated to be repurchased based on current market prices. The ASR was accounted for as an initial stock purchase transaction and a forward stock purchase contract. The initial delivery of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted net earnings per share from the effective date of the ASR. The forward stock purchase contract is classified as an equity instrument. At September 30, 2014, the $60 million holdback was recorded as a reduction to additional paid-in capital in the Condensed Consolidated Balance Sheet. The ASR was funded through a combination of cash on hand and utilization of the Revolving Credit Agreement.

At the conclusion of the ASR, the Company may receive additional shares or cash, or be required to pay additional cash or deliver shares (at the Company’s option) based upon the volume-weighted average price of the Company’s stock, less a discount, over an averaging period, which is expected to end in the fourth quarter of 2014. The ASR is part of the Company’s existing share repurchase program, which had approximately 0.8 million shares available for purchase as of September 30, 2014. The maximum number of shares that can be repurchased under the ASR is limited to 4.0 million shares. As of September 30, 2014, based on the volume-weighted average price of the Company’s common stock since the effective date of the ASR, the investment bank would be required to deliver approximately 0.7 million of additional shares to the Company.

~~11.~~~~Income Taxes~~

The Company’s effective income tax rate for the third quarter of 2014 was 26.1 percent compared to 25.8 percent a year ago. The effective income tax rate for the first nine months of 2014 was 27.5 percent compared to 25.9 percent a year ago.

In the third quarter of 2014, the Company recorded two discrete tax adjustments that partially offset each other. First, the effective tax rate reflects a favorable impact of 5.3 percentage points that relates to the reversal of previously unrecognized tax benefits due to the lapsing of the statute of limitations.

Second, an unfavorable impact of 4.5 percentage points was recognized in the period for an unfavorable audit result in a National Starch subsidiary related to a pre-acquisition period for which we are indemnified by Akzo Nobel N.V. (“Akzo”). The $7 million expense incurred by the acquired subsidiary is recorded in the tax provision, while the reimbursement from Akzo under the indemnification is recorded as other income. As the Company is fully indemnified for this pre-acquisition obligation, the impact on net income is zero.

Without the discrete tax adjustments and the indemnification income, the Company’s effective income tax rate for both the third quarter and first nine months of 2014 would have been approximately 28 percent.

In the third quarter of 2013, the effective tax rate reflected a favorable impact of approximately 4.2 percentage points that relates to the reversal of previously unrecognized tax benefits and favorable provision to return adjustments. The effective income tax rate for the nine months ended September 30, 2013 also reflected a favorable determination received from a Canadian court regarding the tax treatment of a prior period transaction, resulting in a discrete tax benefit of approximately 1.0 percentage point and the favorable impact of approximately 2.0 percentage points related to the reversal of previously unrecognized tax benefits on a year-to-date basis.

~~Without these items, the Company’s effective income tax rates for the third quarter and first nine months of 2013 would have been approximately 30 percent and 29 percent, respectively.~~

~~12.~~~~Subsequent Event~~

On October 14, 2014, the Company, entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Penford Corporation, a Washington corporation (“Penford”), Prospect Sub, Inc., a Washington corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), and the Company. The Merger Agreement and the consummation of the transactions contemplated by the Merger Agreement were unanimously approved by the Company’s board of directors.

The Merger Agreement provides for the merger of Merger Sub with and into Penford, on the terms and subject to the conditions set forth in the Merger Agreement (the “Merger”), with Penford continuing as the surviving corporation in the Merger. As a result of the Merger, Penford will become a wholly-owned subsidiary of the Company.

Pursuant to the Merger Agreement, at the effective time of the Merger (the “Effective Time”), each share (a “Share”) of common stock of Penford (“Penford Common Stock”) issued and outstanding immediately prior to the Effective Time, other than (a) Shares owned by the Company or Merger Sub, or by any subsidiary of the Company or Merger Sub, immediately prior to the Effective Time and (b) Shares outstanding immediately prior to the Effective Time and held by a holder who is entitled to exercise dissenters’ rights and properly exercises dissenters’ rights under Washington law with respect to such Shares, will be converted into the right to receive $19.00 in cash per Share, without interest and subject to and reduced by the amount of any tax withholding. As of the date of the Merger Agreement, Penford had 12,735,038 outstanding Shares and 1,429,000 Shares underlying outstanding options. Outstanding borrowings under Penford’s revolving credit agreement will become due as a result of the Merger. The purchase price is estimated to be $340 million, including the assumption of debt. The Company expects to fund the acquisition of Penford with available cash and proceeds from borrowings under the Company’s revolving credit agreement.

Penford, headquartered in Centennial, Colorado had net sales of $467 million for the fiscal year ended August 31, 2013. Penford employs approximately 445 people and operates six plants in the United States, all of which manufacture specialty starches.

The consummation of the Merger is subject to the satisfaction or waiver of specified closing conditions, including, among other things, (a) the adoption of the Merger Agreement by the holders of a majority of the voting power of the outstanding Shares entitled to vote thereon, (b) the receipt of certain required antitrust approvals, (c) the receipt by the Company of audited financial statements of Penford for fiscal year 2014 and (d) other specified customary closing conditions. The Merger could close as early as the end of the calendar year 2014.

ITEM 2

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

On March 11, 2015, we completed our acquisition of Penford Corporation (“Penford”), a manufacturer of specialty starches that is headquartered in Centennial, Colorado. The purchase price was $332 million in cash. We funded the acquisition of Penford with proceeds from borrowings under our revolving credit agreement. The results of Penford are included in our consolidated results from March 11, 2015 forward.

The acquisition provides us with, among other things, an expanded specialty ingredient product portfolio consisting of potato starch-based offerings. Penford had sales of $444 million for the fiscal year ended August 31, 2014 and provides us with, among other things, six additional manufacturing facilities in the United States, all of which manufacture specialty starches. With the acquisition, we now employ approximately 11,800 people world-wide.

We are a major supplier of high-quality food and industrial ingredients to customers around the world. We have 3642 manufacturing plants located in North America, South America, Asia Pacific and Europe, the Middle East and Africa (“EMEA”), and we manage and operate our businesses at a regional level. We believe this approach provides us with a unique understanding of the cultures and product requirements in each of the geographic markets in which we operate, bringing added value to our customers. Our ingredients are used by customers in the food, beverage, animal feed, paper and corrugating, and brewing industries, among others.

Our Strategic Blueprint continues to guide our ~~decision making~~decision-making and strategic choices with an emphasis on value-added ingredients for our customers. The foundation of our Strategic Blueprint is operational excellence, which includes our focus on safety, quality and continuous improvement. We see growth opportunities in three areas. First is organic growth as we work to expand our current business. Second, we are focused on broadening our ingredient portfolio of on-trend products through internal and external business development. Finally, we look for growth from geographic expansion as we ~~anticipate~~pursue extension of our reach to new locations. The ultimate goal of these strategies and actions is to deliver increased shareholder value.

~~Operating~~While net sales declined due to devaluation of foreign currencies versus the US dollar, operating income, net income ~~attributable to Ingredion~~ and diluted earnings per common share for ~~third~~first quarter ~~2014~~2015 increased ~~30 percent, 37 percent and 45 percent, respectively,~~significantly from ~~the results of~~ a year ago. ~~These increases were~~This growth was driven principally by improved operating ~~income~~results in ~~all of~~ our regions. Our diluted earnings per common share also benefitted from the impact of our share repurchases. While our South American business is improving, operating results continue to be pressured by the difficult economic conditionsNorth America segment as we lapped last year’s adverse weather effects, had strong volumes in ~~that segment~~core and ~~we believe that full year 2014~~specialty ingredients and good cost control. Asia Pacific and EMEA achieved solid operating income for the ~~segment~~quarter, in line with our expectations despite foreign exchange headwinds. These positives were slightly offset by softer demand and foreign exchange headwinds in South America, most predominantly in Brazil. Looking forward, we expect North America to continue to drive bottom-line growth driven by stronger volumes and improved product mix. We anticipate that Asia Pacific and EMEA will ~~decline slightly from 2013.~~improve modestly and be in line with last year, respectively, despite continuing foreign exchange headwinds. South America operating income is expected to be in line with last year with strong performance in the Andean region offsetting softness in the Southern Cone of South America and Brazil.

On October 14, 2014, we entered into a definitive agreement to acquire Penford Corporation (“Penford”), a U.S.-based leader in specialty ingredients for food and non-food applications. The acquisition has been approved by the boards of directors of both companies. It is subject to approval by Penford’s shareholders and regulators as well as to other customary closing conditions. The purchase price is estimated to be $340 million, including the assumption of debt. We expect to fund the acquisition of Penford with available cash and proceeds from borrowings under our revolving credit agreement.21

Penford, headquartered in Centennial, Colorado had net sales of $467 million in fiscal year 2013. Penford employs approximately 445 people and operates six plants in the United States, all of which manufacture specialty starches. See also Note 12 for additional information.

We currently expect that our available cash balances, future cash flow from operations, access to debt markets and borrowing capacity under our credit facilities will provide us with sufficient liquidity to fund our anticipated capital expenditures, dividends and other investing and/or financing activities for the foreseeable future.

Results of Operations

We have significant operations in North America, South America, Asia Pacific and EMEA. For most of our foreign subsidiaries, the local foreign currency is the functional currency. Accordingly, revenues and expenses denominated in the functional currencies of these subsidiaries are translated into US dollars (“USD”) at the applicable average exchange rates for the period. Fluctuations in foreign currency exchange rates affect the US dollar amounts of our foreign subsidiaries’ revenues and expenses. The impact of currency exchange rate changes, where significant, is provided below.

As previously mentioned, on March 11, 2015, we acquired Penford, a global provider of specialty starches. The results of Penford are included in our consolidated financial results from March 11, 2015 forward. While we identify significant fluctuations due to the acquisition, our discussion below also addresses results of operations absent the impact of the Penford acquisition and operations, where appropriate, to provide a more comparable and meaningful analysis.

For The Three ~~and Nine~~ Months Ended ~~September 30, 2014~~March 31, 2015

With Comparatives for the Three ~~and Nine~~ Months Ended ~~September 30, 2013~~March 31, 2014

Net Income attributable to Ingredion. Net income for the quarter ended ~~September 30, 2014~~March 31, 2015 increased to ~~$118.6~~$83.7 million, or ~~$1.60~~$1.15 per diluted common share, from ~~$86.3~~$72.6 million, or ~~$1.10~~$0.96 per diluted common share, in the ~~third~~first quarter of ~~2013. The increase~~2014. Our first quarter 2015 results include an after-tax restructuring charge of $6 million ($0.09 per diluted common share) for employee severance-related costs associated with the Penford acquisition, after-tax costs of $3 million ($0.04 per diluted common share) associated with the acquisition and integration of Penford and after-tax costs of $2 million ($0.02 per diluted common share) relating to the sale of Penford inventory that was adjusted to fair value at the acquisition date in accordance with business combination accounting rules (see Note 3 of the notes to the condensed consolidated financial statements for additional information). Without these acquisition-related charges, our net income ~~primarily reflects operating income growth in each of our business segments. Additionally, a reduction in financing costs contributed to the earnings growth. The improvement in~~would have grown 31 percent from first quarter 2014, while our diluted earnings per ~~common~~ share ~~also reflects~~would have grown by 35 percent. These increases primarily reflect significantly improved operating income in North America, as compared to the ~~favorable impact~~weak results of our share repurchases. Net income for the nine months ended September 30, 2014 increased slightly to $293.8 million from $292.2 million in the prior-year period. Our net income per diluted common share for the nine months ended September 30, 2014 increased 5 percent to $3.89 per share from $3.71 per share a year ago. ~~The improvement in our diluted earnings per common share was primarily driven by the favorable impact of our share repurchases.~~

Net Sales. ~~Third~~First quarter 2015 net sales totaled $1.33 billion, down 2 percent from first quarter 2014 net sales ~~totaled $1.46 billion, down 9~~of $1.36 billion. Without the sales contributed by the acquired Penford operations, net sales would have declined 4 percent from ~~third quarter 2013 net sales~~the year-ago period. This decrease primarily reflects unfavorable currency translation of ~~$1.61 billion. The decrease in net sales reflects~~6 percent due to the stronger US dollar. A 3 percent organic volume improvement was partially offset by a 91 percent price/product mix ~~decline driven by lower raw material costs (primarily corn). Volume growth of 2 percent was offset by unfavorable currency translation of 2 percent attributable to weaker foreign currencies.~~decline.

North American net sales for ~~third~~first quarter ~~2014 decreased 15~~2015 increased 2 percent to ~~$806~~$754 million, from ~~$949~~$737 million a year ago. Without the sales contributed by the acquired Penford operations, net sales would have declined 1 percent. This decrease primarily reflects a 174 percent price/product mix decline driven principally by lower raw material ~~costs. A 3~~costs and unfavorable currency translation of 2 percent attributable to the weaker Canadian dollar, which more than offset organic volume ~~improvement~~

growth of 5 percent. In South America, first quarter 2015 net sales decreased 12 percent to $258 million from $294 million a year ago. This decline was ~~partially offset~~driven by unfavorable currency translation of 116 percent ~~in Canada. In South America, third~~and a 4 percent volume decline, which more than offset price/product mix improvement of 8 percent. Asia Pacific first quarter 2014 net sales ~~decreased 5~~increased 1 percent to ~~$308~~$187 million from ~~$323~~$185 million a year ago. The decrease reflects a 10 percent decline attributable to currency translation and a 2 percent volume reduction driven by soft customer demand in Brazil due to a weak economy, which more than offset a 7 percent price/product mix improvement. Asia Pacific had net sales of $206 million for the third quarter of 2014, up slightly from $205 million a year ago. The increase reflects volumeVolume growth of 49 percent ~~and favorable currency translation of 1 percent driven by a stronger South Korean Won, which~~ more than offset a 5 percent price/product mix ~~decline.~~decline and unfavorable translation impact of 3 percent associated with weaker foreign currencies. EMEA net sales for ~~third~~first quarter ~~2014 grew 4~~2015 declined 7 percent to ~~$141~~$131 million from ~~$135~~$141 million a year ago. This ~~increase was driven by volume growth of 3 percent and favorable~~decrease reflects unfavorable currency translation of 28 percent primarily attributable to ~~stronger local currencies, which more than offset~~the weaker Euro and British Pound Sterling and a ~~price/product mix decline of~~ 1 ~~percent.~~

~~Net sales for the nine months ended September 30, 2014 totaled $4.30 billion, down 11 percent from $4.83 billion in the same period a year ago. A 9~~ percent price/product mix decline,

primarily attributable to lower raw material costs and unfavorable currency translation of 4 percent due to weaker foreign currencies drove the sales decline. A 2 percent volume increase, reflecting growth in each of our segments, partially offset the unfavorable impacts of the reduced prices and currency translation.

Net sales in North America for the first nine months of 2014 decreased 17 percent to $2.36 billion, from $2.84 billion a year ago. This decrease primarily reflects a 17 percent price/product mix decline driven principally by lower raw material costs. A 1 percent volume improvement offset unfavorable currency translation of 1 percent in Canada. In South America, net sales for the first nine months of 2014 decreased 9 percent to $906 million from $992 million a year ago, as a 16 percent decline attributable to weaker foreign currencies more than offset price/product mix improvement of 5 percent and 2 percent volume growth. In Asia Pacific, net sales for the first nine months of 2014 decreased 1 percent to $594 million from $601 million a year ago. The decrease reflects a 5 percent price/product mix decline and unfavorable currency translation of 1 percent, which more than offset volume growth of 52 percent. EMEA net sales for the first nine months of 2014 increased 9 percent to $438 million from $401 million a year ago. This increase reflects price/product mix improvement of 4 percent, 4 percent volume growth and favorable currency translation of 1 percent attributable to a stronger Euro and Pound Sterling.

Cost of Sales and Operating Expenses. Cost of sales of ~~$1.16~~$1.05 billion for the ~~third~~first quarter of ~~2014~~2015 decreased 145 percent from ~~$1.35~~$1.11 billion in the prior-year period. ~~Cost of sales of $3.46 billion for the first nine months of 2014 decreased 13 percent from $3.99 billion a year ago. These reductions~~This reduction primarily ~~reflect~~reflects lower raw material costs and the effects of currency translation. Gross corn costs per ton for the ~~third~~first quarter ~~and first nine months~~ of ~~2014~~2015 decreased approximately 2412 percent ~~and 26 percent, respectively,~~ from the ~~comparable~~ prior-year ~~periods,~~period, driven by lower market prices for corn. Currency translation caused cost of sales for the ~~third~~first quarter ~~and first nine months of 2014~~ to decrease approximately 26 percent ~~and 4 percent, respectively,~~ from ~~the prior-year periods,~~2014, reflecting the impact of ~~weaker foreign currencies, particularly in South America.~~the stronger US dollar. Our gross profit margin for the ~~third~~first quarter ~~and first nine months~~ of ~~2014~~2015 was ~~20.4~~21 percent ~~and 19.6 percent, respectively,~~ compared to ~~16.1 percent and 17.4~~18 percent last ~~year. Despite reduced selling prices driven by lower corn costs, we have generally maintained per unit gross profit dollar levels, resulting in the~~year, primarily reflecting significantly improved gross profit ~~margin percentages.~~margins in North America.

Operating expenses for the ~~third~~first quarter ~~and first nine months~~ of ~~2014~~2015 were ~~$129~~$132 million, ~~and $399 million, respectively, as compared to $125 million and $399 million last year. The increase for third quarter 2014 primarily reflects higher compensation-related costs, which~~consistent with the year-ago period. Favorable translation effects associated with the stronger US dollar more than offset $4 million of costs associated with the ~~impact~~acquisition and integration of ~~weaker foreign currencies, particularly in South America.~~Penford as well as other incremental operating expenses of Penford. Currency translation associated with the weaker foreign currencies caused operating expenses for the ~~third~~first quarter ~~and first nine months~~ of ~~2014~~2015 to decrease approximately 26 percent ~~and 4 percent, respectively,~~ from the prior-year ~~periods.~~period. Operating expenses, as a percentage of gross profit, ~~were 43 percent and~~was 47 percent for the ~~third~~first quarter ~~and first nine months~~ of ~~2014, respectively,~~2015, as compared to ~~48 percent and 47~~53 percent in the ~~comparable prior-year periods.~~year-ago period.

Other Income, net. Other income, net for the ~~third quarter and~~ first ~~nine~~three months of ~~2014 increased~~2015 decreased to ~~$10~~$1 million ~~and $18~~from $5 million ~~respectively, from $3 million and $11 million~~last year. The decrease primarily reflects the absence in 2015 of certain income items in South America recognized in the year-ago periods. The increases reflect the recording of $7 million of income associated with a tax indemnification agreement relating to a subsidiary acquired from Akzo Nobel N.V. (“Akzo”) in 2010. In the thirdfirst quarter of ~~2014, we recognized a charge to our income tax provision for an expected unfavorable income tax audit result at this subsidiary related to a~~2014.

pre-acquisition period for which we are indemnified by Akzo. The costs incurred by the acquired subsidiary are recorded in our provision for income taxes while the reimbursement from Akzo under the indemnification agreement is recorded as other income. The impact on our net income is zero.

Other income for the nine months ended September 30, 2014 also includes a $5 million pre-tax gain from the second quarter sale of an investment in a non-consolidated affiliate. This investment had been accounted for under the cost method and was reported in Investments in our consolidated balance sheet. Additionally, other income for the first nine months of 2014 includes $4 million of costs relating to product liability claims recorded in the second quarter of 2014.

Operating Income. ~~Third~~First quarter ~~2014~~2015 operating income increased 3014 percent to ~~$178~~$140 million from ~~$137~~$122 million a year ~~ago,~~ago. Operating income for first quarter 2015 includes a $10 million restructuring charge for employee severance-related costs associated with the Penford acquisition and $4 million of other costs related to the acquisition and integration of Penford. Although the majority of the severance-related costs will be paid within one year, certain costs are anticipated to be paid out through 2017. Additionally, the first quarter 2015 results include the flow through of $3 million of costs associated with Penford inventory that was marked up to fair value at the acquisition date in accordance with business combination accounting rules. Without these acquisition-related charges, our operating income would have grown 28 percent from first quarter 2014. This increase primarily ~~reflecting earnings growth~~reflects our significantly improved operating income in ~~each~~North America from the weak results of ~~our segments.~~a year ago. Unfavorable currency translation ~~due~~attributable to ~~weaker foreign currencies~~the stronger US dollar reduced operating income by approximately $2$10 million from the prior-year period. North America operating income for ~~third~~first quarter ~~2014 increased 17~~2015 grew 57 percent to ~~$113~~$102 million from ~~$97~~the weak results of $65 million a year ago. ~~The increase was driven primarily by~~Our first quarter 2015 results benefited from more normal weather conditions, volume growth and cost savings. Translation effects associated with the weaker Canadian dollar reduced operating income by approximately $1 million in the segment. South America operating income for third quarter 2014 increased 46 percent to $27 million from $19 million in the year-ago period. The increase reflects earnings growth throughout the segment principally driven by improved product selling prices. Translation effects associated with weaker South American currencies (particularly the Argentine Peso and Brazilian Real) caused operating income to decrease by approximately $1 million. Asia Pacific operating income for third quarter 2014 increased 14 percent to $27 million from $24 million a year ago. This increase primarily reflects volume growth in our Asian business along with lower corn ~~costs in South Korea. EMEA operating income increased 28 percent to $22 million from $17 million a year ago. This increase primarily reflects volume growth, cost reductions~~ and ~~manufacturing efficiencies associated with recent capital investments.~~

~~Operating income for the nine months ended September 30, 2014 was $463 million, up from $452 million a year ago. Without the $7~~energy costs. Our North American results also include approximately $4 million of income from the tax indemnification agreement with Akzo, operating income would have increased 1 percent from the 2013 period. This improvement primarily reflects earnings growth in Asia Pacific and EMEA along with lower corporate expenses. Unfavorable currency translation attributablebusiness interruption insurance recoveries related to weaker foreign currencies reduced operating income by approximately $17 million from the prior-year period. North America operating income for the first nine months of 2014 decreased 6 percent to $289 million from $308 million a year ago. The decline reflects our weak first-quarter 2014last year’s weather. Our year-ago results ~~that~~ were negatively impacted by harsh winter weather conditions that caused higher energy, transportation and production costs. Translation

effects associated with ~~the~~a weaker Canadian dollar reduced first quarter 2015 operating income by approximately $5$2 million in the segment. South America operating income for ~~the~~ first ~~nine months of 2014 declined 7~~quarter 2015 decreased 18 percent to ~~$74~~$25 million from ~~$80~~$30 million a year ago. The ~~decrease~~decline primarily reflects weaker results in Brazil driven principally by lower demand. Improved selling prices for our products helped to partially offset the ~~Southern Cone~~unfavorable impacts of ~~South America during the first six months of 2014, which more than offset earnings growth in Brazil. The operating income decline~~currency devaluation and higher local production costs in the Southern Cone of South America primarily reflects the impact of higher production costs and our inability to increase selling prices to a level sufficient to recover the impacts of inflation and currency devaluation earlier in the year.segment. Translation effects associated with weaker South American currencies (particularly the

Brazilian Real and the Argentine ~~Peso and Brazilian Real)~~Peso) caused operating income to decrease by approximately ~~$10 million in the segment. While operating results~~$5 million. We anticipate that our business in South America ~~have improved as the year has progressed, our business there continues~~will continue to be challenged by difficult economic conditions ~~and we currently anticipate that full year 2014 operating income~~ for the ~~segment will decline slightly from 2013.~~foreseeable future. Asia Pacific operating income for ~~the~~ first ~~nine months of 2014 grew 14 percent to $80~~quarter 2015 was $26 million, unchanged from ~~$70 million~~ a year ~~ago, driven~~ago. Volume growth was offset by ~~volume growth in our Asian business and lower corn costs in South Korea.~~unfavorable currency translation. Translation effects associated with weaker ~~Asian~~Asia Pacific currencies caused operating income to decrease by approximately $2$1 million in the segment. EMEA operating income increased 285 percent to ~~$69~~$22 million from ~~$54~~$21 million a year ~~ago~~ago. The increase was driven by improved selling prices ~~volume growth~~ and ~~manufacturing efficiencies~~lower costs. Translation effects associated with ~~recent capital investments.~~the weaker Euro and British Pound Sterling had an unfavorable impact of $2 million on operating income in the segment.

Financing Costs-net. Financing costs for the ~~third~~first quarter ~~and first nine months~~ of ~~2014 decreased to $15~~2015 were $14 million, ~~and $49~~down from $17 million ~~respectively, from $18 million and $51 million in the comparable prior-year periods.~~a year ago. The decrease ~~in financing costs for third quarter 2014~~ primarily reflects reduced ~~foreign currency transaction losses, partially offset by~~interest expense resulting from lower average interest rates on our borrowings attributable to the effect of our interest rate swaps. Additionally, an increase in interest ~~expense driven by lower capitalized interest. The decrease~~income attributable to higher cash balances and short-term investments and increased interest rates, contributed to the reduction in financing costs for the first nine months of 2014 was driven principally by a reduction in foreign currency transaction losses. Increased interest expense driven by lower capitalized interest was substantially offset by increases in interest income mainly due to higher interest rates on cash investments.costs.

Provision for Income Taxes. Our effective income tax rate for the ~~third~~first quarter of ~~2014 was 26.1~~2015 increased to 31.7 percent ~~compared to 25.8 percent a year ago. The effective income tax rate for the first nine months of 2014 was 27.5 percent compared to 25.9~~from 28.8 percent a year ago.

InWe use the ~~third~~US dollar as the functional currency for our subsidiaries in Mexico. Because of the continued decline in the value of the Mexican peso versus the US dollar, our first quarter ~~of 2014, we recorded two discrete income tax adjustments that partially offset each other. First, our~~2015 effective tax rate ~~reflects a favorable impact of 5.3~~is unfavorably impacted by 1.5 percentage points ~~that relates~~compared to the ~~reversal~~same quarter a year ago.

It is reasonably possible that we could recognize approximately $2 million of ~~previously~~ unrecognized tax benefits ~~due to the lapsing~~as a result of a lapse of the statute of ~~limitations.~~

~~Second, an unfavorable impact of 4.5 percentage points was~~limitations in various jurisdictions. In such event, these benefits would be recognized as discrete items and favorably affect our income tax provision in the period for an unfavorable audit result in a National Starch subsidiary related to a pre-acquisition period for which we are indemnified by Akzo. The $7 million expense incurred by the acquired subsidiary is recorded in the tax provision, while the reimbursement from Akzo under the indemnification is recorded as other income. As we are fully indemnified for this pre-acquisition obligation, the impact on net income is zero.

~~Without the discrete tax adjustments~~second and ~~the indemnification income, our effective income tax rate for both the~~ third ~~quarter and first nine months~~quarters of ~~2014 would have been approximately 28 percent.~~

~~Without these items, our effective income tax rates for the third quarter and first nine months of 2013 would have been approximately 30 percent and 29 percent, respectively.~~

~~Net Income Attributable to Non-controlling Interests~~. The net income attributable to non-controlling interests for the third quarter and first nine months of 2014 was $2 million and $6 million, respectively, as compared to $2 million and $5 million in the prior-year periods. The increase for the first nine months of 2014 from the prior-year period primarily reflects improved earnings in Pakistan.2015.

Comprehensive Income ~~(Loss)~~ Attributable to Ingredion. WeFor the first quarter of 2015 we recorded a comprehensive loss of ~~$39~~$59 million, ~~for the third quarter of 2014,~~ as compared to comprehensive income of ~~$83~~$80 million in the prior-year period. ~~This~~The decrease in comprehensive income primarily reflects a ~~$127~~$114 million unfavorable variance in the foreign currency translation ~~adjustment. The unfavorable variance in the foreign currency translation~~ adjustment ~~reflects~~and a ~~significant weakening in end of period foreign currencies relative to the US dollar, as compared to the year-ago period when foreign currencies had strengthened moderately.~~

~~For the first nine months of 2014, we recorded comprehensive income of $158 million, as compared with $149 million a year ago. This increase in comprehensive income primarily reflects a $21~~$43 million year-over-year ~~increase~~decrease associated with our cash-flow hedging activity, which more than offset ~~an $11 million unfavorable variance in the foreign currency translation adjustment.~~our net income growth. The unfavorable variance in the foreign currency translation adjustment for the three months ended March 31, 2015 reflects a greater weakening in end of period foreign currencies relative to the US dollar, as compared to the year-ago period.

Liquidity and Capital Resources

Cash provided by operating activities for the first ~~nine~~three months of ~~2014~~2015 was ~~$462~~$69 million, as compared to ~~$362~~$121 million a year ago. The ~~increase~~decrease in operating cash flow primarily reflects ~~a reduction~~an increase in our use of cash ~~outflows~~for working capital activities, which more than offset our net

income growth. A decrease in accounts payable and accrued liabilities associated with the timing of payments and an increase in our margin accounts relating to commodity hedging contracts were the primary drivers of our year-over-year use of cash for working ~~capital.~~capital activities.

Capital expenditures of ~~$187~~$58 million for the first ~~nine~~three months of ~~2014~~2015 are in line with our capital spending plan for the year. We anticipate that our capital expenditures will be ~~slightly below~~approximately $300 million for full year ~~2014.~~2015.

During the first quarter of 2015, we repurchased 234 thousand shares of our common stock in open market transactions for approximately $18 million.

We have a senior, unsecured $1 billion revolving credit agreement (the “Revolving Credit Agreement”) that matures on October 22, 2017. At ~~September 30, 2014,~~March 31, 2015, there were ~~$175~~$483 million of borrowings outstanding under our Revolving Credit ~~Agreement.~~Agreement, as compared to $87 million at December 31, 2014. The increase primarily reflects borrowings to fund the acquisition of Penford. In addition to borrowing availability under our Revolving Credit Agreement, we also have approximately ~~$499~~$428 million of unused operating lines of credit in the various foreign countries in which we operate.

At ~~September 30, 2014,~~March 31, 2015, we had total debt outstanding of ~~$1.92~~$2.23 billion, compared to ~~$1.81~~$1.83 billion at December 31, ~~2013.~~2014. In addition to the borrowings outstanding under the Revolving Credit Agreement, our total debt includes $350 million of 3.2 percent notes due November 1, 2015, $300 million (principal amount) of 1.8 percent senior notes due 2017, $200 million of 6.0 percent senior notes due 2017, $200 million of 5.62 percent senior notes due 2020, $400 million (principal amount) of 4.625 percent notes due 2020, $250 million (principal amount) of 6.625 percent senior notes due 2037, and ~~$29~~$22 million of consolidated subsidiary debt consisting of local country short-term borrowings. The weighted average interest rate on our

total indebtedness was approximately ~~4.2~~3.6 percent for the first ~~nine~~three months of ~~2014,~~2015, compared to ~~4.3~~4.4 percent in the comparable prior-year period.

As noted above, we have $350 million of 3.2 percent senior notes that mature November 1, 2015. These borrowings are included in long-term debt in our condensed consolidated balance sheet as we have the ability and intent to refinance the notes on a long-term basis prior to the maturity date.

On ~~September 16, 2014,~~March 18, 2015, our board of directors declared a quarterly cash dividend of $0.42 per share of common stock. This dividend was paid on ~~October~~April 27, ~~2014~~2015 to stockholders of record at the close of business on ~~September 30, 2014.~~

As part of the stock repurchase program, we entered into an accelerated share repurchase agreement (“ASR”) on July 30, 2014 with an investment bank under which we repurchased $300 million of our common stock. We paid the $300 million on August 1, 2014 and received an initial delivery of shares from the investment bank of approximately 3.2 million shares, representing approximately 80 percent of the shares anticipated to be repurchased based on current market prices. The ASR was accounted for as an initial stock purchase transaction and a forward stock purchase contract. The initial delivery of shares resulted in an immediate reduction of the outstanding shares used to calculate the weighted average common shares outstanding for basic and diluted net earnings per share from the effective date of the ASR. The forward stock purchase contract is classified as an equity instrument. At September 30, 2014, the $60 million holdback was recorded as a reduction to additional paid-in capital in the Condensed Consolidated Balance Sheet. The ASR was funded through a combination of cash on hand and utilization of the Revolving Credit Agreement.

At the conclusion of the ASR, we may receive additional shares or cash, or be required to pay additional cash or deliver shares (at our option) based upon the volume-weighted average price of our stock, less a discount, over an averaging period, which is expected to end in the fourth quarter of 2014. The ASR is part of our existing share repurchase program, which had approximately 0.8 million shares available for purchase as of September 30, 2014. The maximum number of shares that can be repurchased under the ASR is limited to 4.0 million shares. As of September 30, 2014, based on the volume-weighted average price of our common stock since the effective date of the ASR, the investment bank would be required to deliver approximately 0.7 million of additional shares to us.

On October 14, 2014, we entered into an Agreement and Plan of Merger (the “Merger Agreement”), by and among Penford Corporation, a Washington corporation (“Penford”), Prospect Sub, Inc., a Washington corporation and a wholly-owned subsidiary of the Company (“Merger Sub”), and the Company. The Merger Agreement and the consummation of the transactions contemplated by the Merger Agreement were unanimously approved by our board of directors. The Merger Agreement provides for the merger of Merger Sub with and into Penford, on the terms and subject to the conditions set forth in the Merger Agreement (the “Merger”), with Penford continuing as the surviving corporation in the Merger. As a result of the Merger, Penford will become a wholly-owned subsidiary of the Company.

12,735,038 outstanding Shares and 1,429,000 Shares underlying outstanding options. Outstanding borrowings under Penford’s revolving credit agreement will become due as a result of the Merger. The purchase price is estimated to be $340 million, including the assumption of debt. We expect to fund the acquisition of Penford with available cash and proceeds from borrowings under our revolving credit agreement. See also Note 12 for additional information.March 31, 2015.

We currently expect that our available cash balances, future cash flow from operations, access to debt markets, and borrowing capacity under our credit facilities will provide us with sufficient liquidity to fund our anticipated capital expenditures, dividends, and other investing and/or financing activities for the foreseeable future.

We have not provided federal and state income taxes on accumulated undistributed earnings of certain foreign subsidiaries because these earnings are considered to be permanently reinvested. It is not practicable to determine the amount of the unrecognized deferred tax liability related to the undistributed earnings. We do not anticipate the need to repatriate funds to the United States to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service ~~requirements or planned acquisition of Penford.~~requirements. Approximately ~~$540~~$573 million of our total cash and cash equivalents and short-term investments of ~~$565~~$609 million at ~~September 30, 2014,~~March 31, 2015, was held by our operations outside of the United States. We anticipate that such cash and short-term investments will be used to fund growth

opportunities outside of the United States, including capital expenditures and acquisitions. We expect that available cash balances and credit facilities in the United States, along with cash generated from operations and access to debt markets, will be sufficient to meet our operating and other cash needs for the foreseeable future.

Hedging

We are exposed to market risk stemming from changes in commodity prices, foreign currency exchange rates and interest rates. In the normal course of business, we actively manage our exposure to these market risks by entering into various hedging transactions, authorized under established policies that place clear controls on these activities. These transactions utilize exchange-traded derivatives or over-the-counter derivatives with investment grade counterparties. Our hedging transactions may include, but are not limited to, a variety of derivative financial instruments such as commodity futures, options and swap contracts, forward currency contracts and options, interest rate swap agreements and treasury lock agreements. See Note 45 of the Notes to the Condensed Consolidated Financial Statements for additional information.

Commodity Price Risk:

Our principal use of derivative financial instruments is to manage commodity price risk in North America relating to anticipated purchases of corn and natural gas to be used in the manufacturing process. We periodically enter into futures, options and swap contracts for a portion of our anticipated corn and natural gas usage, generally over the following twelve to twenty-four months, in order to hedge price risk associated with fluctuations in market prices. ~~These~~Effective with the acquisition of Penford, we now produce and sell ethanol. We now enter into swap contracts to hedge price risk associated with fluctuations in market prices of ethanol. Our derivative instruments are recognized at fair value and have effectively reduced our exposure to changes in market prices for these commodities. We are unable to directly hedge price risk related to co-product sales; however, we occasionally enter into hedges of soybean oil (a competing product to our corn oil) in order to mitigate the price risk of corn oil sales. Unrealized gains and losses associated with marking our commodities-based derivative instruments to market are recorded as a component of other comprehensive income (“OCI”). At

~~September 30, 2014,~~ March 31, 2015, our accumulated other comprehensive loss account (“AOCI”) included ~~$57~~$19 million of losses, net of income taxes of ~~$26~~$9 million, related to these derivative instruments. It is anticipated that approximately ~~$52~~$18 million of these losses, net of income taxes of ~~$25~~$9 million, will be reclassified into earnings during the next twelve months. We expect the losses to be offset by changes in the underlying commodities cost.

Foreign Currency Exchange Risk:

Due to our global operations, including operations in many emerging markets, we are exposed to fluctuations in foreign currency exchange rates. As a result, we have exposure to translational foreign exchange risk when our foreign ~~operation~~operations’ results are translated to USD and to transactional foreign exchange risk when transactions not denominated in the functional currency of the operating unit are revalued. We primarily use derivative financial instruments such as foreign currency forward contracts, swaps and options to manage our foreign currency transactional exposures. At ~~September 30, 2014,~~March 31, 2015, we had foreign currency forward sales contracts with an aggregate notional amount of ~~$101~~$141 million and foreign currency forward purchase contracts with an aggregate notional amount of ~~$57~~$59 million that hedged transactional exposures. The fair value of these derivative instruments is an asset of $1$5 million at ~~September 30, 2014.~~March 31, 2015.

We also have ~~certain~~ foreign currency derivative instruments that hedge certain foreign currency transactional exposures and are designated as cash-flow hedges. ~~At September 30, 2014,~~The amount in AOCI ~~included $1 million of gains, net of income taxes, associated with~~relating to these hedges. It is anticipated that approximately $0.2 million of these gains, net of income taxes, will be reclassified into earnings during the next twelve months. We expect the gains to be offset by changes in the fair value of the underlying hedged items.hedges at March 31, 2015 was not significant.

We have significant operations in Argentina. We utilize the official exchange rate published by the Argentine government for re-measurement purposes. Due to exchange controls put in place by the Argentine government, a parallel market exists for exchanging Argentine pesos to US dollars at rates less favorable than the official rate. ~~Argentina and other emerging markets have experienced increased devaluation and volatility in 2014, particularly during the first half of the year.~~

Interest Rate Risk:

We ~~occasionally~~ use interest rate swaps and occasionally use Treasury Lock agreements (“T-Locks”) to hedge our exposure to interest rate changes, to reduce the volatility of our financing costs, or to achieve a desired proportion of fixed versus floating rate debt, based on current and projected market conditions. We did not have any T-Locks outstanding at ~~September 30, 2014.~~March 31, 2015.

~~In September 2014, we entered into~~We have interest rate swap agreements that effectively convert the interest rates on our 3.2 percent $350 million senior notes due November 1, 2015, our 6.0 percent $200 million senior notes due April 15, 2017, our 1.8 percent $300 million senior notes due September 25, 2017 and on $200 million of our $400 million 4.625 percent senior notes due November 1, 2020, to variable rates. ~~Additionally, we have interest rate swap agreements that effectively convert the interest rate on our 3.2 percent $350 million senior notes due November 1, 2015 to a variable rate.~~ These swap agreements call for us to receive interest at the fixed coupon rate of the respective notes and to pay interest at a variable rate based on the six-month US dollar LIBOR rate plus a spread. We have

designated these interest rate swap agreements as hedges of the changes in fair value of the underlying debt obligations attributable to changes in interest rates and account for them as fair-value hedges. Changes in the fair value of interest rate swaps designated as hedging instruments that effectively offset the variability in the fair value of outstanding debt obligations are reported in earnings. These amounts offset the gain or loss (that is, the change in fair value) of the hedged debt instruments that are attributable to changes in interest rates (that is, the hedged risk), which is also recognized in earnings. The fair value of these interest rate swap agreements was $21 million at ~~September 30, 2014 and December~~March 31, ~~2013 was $8 million and $13 million, respectively,~~2015 and is reflected in the Condensed Consolidated Balance ~~Sheets~~Sheet within other assets, with an offsetting amount recorded in long-term debt to adjust the carrying amount of the hedged debt obligations.

At ~~September 30, 2014,~~March 31, 2015, AOCI included $7$6 million of losses (net of income taxes of $4 million) related to settled ~~T-Locks.~~Treasury Lock agreements. These deferred losses are being amortized to financing costs over the terms of the senior notes with which they are associated. It is anticipated that $2 million of these losses (net of income taxes of $1 million) will be reclassified into earnings during the next twelve months.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are described in the Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our ~~2013~~2014 Annual Report on Form 10-K. There have been no changes to our critical accounting policies and estimates during the ~~nine~~three months ended ~~September 30, 2014.~~March 31, 2015.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends these forward-looking statements to be covered by the safe harbor provisions for such statements.

Forward-looking statements include, among other things, any statements regarding the Company’s prospects or future financial condition, earnings, revenues, tax rates, capital expenditures, expenses or other financial items, any statements concerning the Company’s prospects or future operations, including management’s plans or strategies and objectives therefor and any assumptions, expectations or beliefs underlying the foregoing.

These statements can sometimes be identified by the use of forward looking words such as “may,” “will,” “should,” “anticipate,” “assume”, “believe,” “plan,” “project,” “estimate,” “expect,” “intend,” “continue,” “pro forma,” “forecast,” “outlook” or other similar expressions or the negative thereof. All statements other than statements of historical facts in this report or referred to in or incorporated by reference into this report are “forward-looking statements.”

These statements are based on current circumstances or expectations, but are subject to certain inherent risks and uncertainties, many of which are difficult to predict and are beyond our control. Although we believe our expectations reflected in these forward-looking statements are based on reasonable assumptions, stockholders are cautioned that no assurance can be given that our expectations will prove correct.

Actual results and developments may differ materially from the expectations expressed in or implied by these statements, based on various factors, including the effects of global economic conditions, including, particularly, continuation or worsening of the current economic, currency and political conditions in South America and economic conditions in Europe, and their impact on our sales volumes and pricing of our products, our ability to collect our receivables from customers and our ability to raise funds at

reasonable rates; fluctuations in worldwide markets for corn and other commodities, and the associated risks of hedging against such fluctuations; fluctuations in the markets and prices for our co-products, particularly corn oil; fluctuations in aggregate industry supply and market demand; the behavior of financial markets, including foreign currency fluctuations and fluctuations in interest and exchange rates; ~~continued~~ volatility and turmoil in the capital markets; the commercial and consumer credit environment; general political, economic, business, market and weather conditions in the various geographic regions and countries in which we buy our raw materials or manufacture or sell our products; future financial performance of major industries which we serve, including, without limitation, the food and beverage, pharmaceuticals, paper, corrugated, textile and brewing industries; energy costs and availability, freight and shipping costs, and changes in regulatory controls regarding quotas, tariffs, duties, taxes and income tax rates; operating difficulties; availability of raw materials, including potato starch, tapioca and the specific varieties of corn upon which our products are based; energy issues in Pakistan; boiler reliability; our ability to effectively integrate and operate acquired ~~businesses;~~businesses including the Penford business; our ability to achieve budgets and to realize expected synergies; our ability to complete planned maintenance and investment projects successfully and on budget; labor disputes; genetic and biotechnology issues; changing consumption preferences including those relating to high fructose corn syrup; increased competitive and/or customer pressure in the ~~starch processing~~corn refining industry; and the outbreak or continuation of serious communicable disease or hostilities including acts of terrorism. Factors relating to the ~~proposed~~ acquisition of Penford Corporation that could cause actual results and developments to differ from expectations ~~include: required regulatory approvals may not be obtained in a timely manner, if at all; the proposed acquisition may not be consummated in a timely manner or at all;~~include that the anticipated benefits of the ~~proposed~~ acquisition, including synergies, may not be ~~realized;~~realized, and that the integration of Penford’s operations with ~~those of Ingredion~~our operations may be materially delayed or may be more costly or difficult than expected.

Our forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of the statement as a result of new information or future events or

developments. If we do update or correct one or more of these statements, investors and others should not conclude that we will make additional updates or corrections. For a further description of these and other risks, see “Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, ~~2013~~2014 and subsequent reports on ~~Forms 10-Q and~~Form 8-K.

ITEM 3

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

See the discussion set forth in Part II, Item 7A. Quantitative and Qualitative Disclosures About Market Risk at pages 48 to 50 in our Annual Report on Form 10-K for the year ended December 31, ~~2013,~~2014, for a discussion as to how we address risks with respect to interest rates, raw material and energy costs and foreign currencies. There have been no material changes in ~~our market risks~~the information that would be provided with respect to those disclosures from December 31, ~~2013~~2014 to ~~September 30, 2014.~~March 31, 2015.

ITEM 4

CONTROLS AND PROCEDURES

Our management, including our Chief Executive Officer and our Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures as of ~~September 30, 2014.~~March 31, 2015. Based on that evaluation, our Chief Executive Officer and our Chief

Financial Officer concluded that our disclosure controls and procedures (a) are effective in providing reasonable assurance that all material information required to be filed in this report has been recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to our management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. There have been no changes in our internal control over financial reporting during the quarter ended ~~September 30, 2014~~March 31, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On March 11, 2015, we completed our acquisition of Penford. We are currently in the process of integrating Penford’s operations, processes and internal controls. See Note 3 of the Notes to the Condensed Consolidated Financial Statements for additional information regarding the acquisition.

3429

PART II OTHER INFORMATION

ITEM 2

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities:

(shares in thousands)

Total
Number
of Shares
Purchased

Average
Price
Paid
per Share

Total Number of
Shares Purchased
as part of Publicly
Announced Plans
or Programs

Maximum Number
(or Approximate
Dollar Value) of
Shares that may
yet be Purchased
Under the Plans or
Programs at end
of period

July 1 – July 31, 2014

—

—

—

4,000 shares

August 1 – August 31, 2014

3,153

$
76.13

3,153

847 shares

Sept. 1 – Sept. 30, 2014

—

—

—

847 shares

Total

3,153

3,153

(shares in thousands)	Total Number of Shares Purchased	Average Price Paid per Share	Total Number of Shares Purchased as part of Publicly Announced Plans or Programs	Maximum Number (or Approximate Dollar Value) of Shares that may yet be Purchased Under the Plans or Programs at end of period

Jan. 1 — Jan. 31, 2015	—	—	—	5,176 shares
Feb. 1 — Feb. 28, 2015	—	—	—	5,176 shares
March 1 — March 31, 2015	234	78.15	234	4,942 shares
Total	234		234

On December ~~13, 2013,~~12, 2014, the Board of Directors authorized a new stock repurchase program permitting the Company to purchase up to 45 million of its outstanding common shares from January 1, 2015 through December ~~12, 2018. As~~31, 2019. The Company’s previously authorized stock repurchase program permitting the purchase of ~~September 30, 2014, we had repurchased approximately 3.2~~up to 4 million shares ~~under the new program, leaving 0.8~~has been fully utilized. At March 31, 2015 we have 4.9 million shares available for ~~repurchase.~~

~~As part of~~repurchase under the stock repurchase program, we entered into an accelerated share repurchase agreement (“ASR”) on July 30, 2014 with an investment bank under which we repurchased $300 million of our common stock. We paid the $300 million on August 1, 2014 and received an initial delivery of shares from the investment bank of approximately 3.2 million shares, representing approximately 80 percent of the shares anticipated to be repurchased based on current market prices. At the conclusion of the ASR, we may receive additional shares or cash or be required to pay additional cash or deliver shares (at our option) based upon the volume-weighted average price of our stock, less a discount, over an averaging period, which is expected to end in the fourth quarter of 2014. As of September 30, 2014, based on the volume-weighted average price of our common stock since the effective date of the ASR, the investment bank would be required to deliver approximately 0.7 million of additional shares to us.program.

ITEM 6

EXHIBITS

a) Exhibits

Exhibits required by Item 601 of Regulation S-K are listed in the Exhibit Index hereto.

All other items hereunder are omitted because either such item is inapplicable or the response is negative.

3530

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

				INGREDION INCORPORATED


DATE:	~~November 3, 2014~~	May 6, 2015	By	~~/s/~~/s/ Jack C. Fortnum
				Jack C. Fortnum
			Executive Vice President and Chief Financial Officer


DATE:	~~November 3, 2014~~	May 6, 2015	By	~~/s/~~/s/ Matthew R. Galvanoni
			Matthew R. Galvanoni
				Vice President and Controller

3631

EXHIBIT INDEX

Number		Description of Exhibit

~~2.1~~10.26		Confidential Separation Agreement and ~~Plan of Merger,~~General Release, dated as of ~~October 14, 2014,~~January 16, 2015, by and ~~among Penford Corporation, a Washington corporation, Prospect Sub, Inc., a Washington corporation and a wholly-owned subsidiary of~~between the Company and the Company. Certain schedules referenced in the Agreement and Plan of Merger have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule will be furnished supplementally to the SEC upon request.John F. Saucier

31.1		CEO Section 302 Certification Pursuant to the Sarbanes-Oxley Act of 2002

31.2		CFO Section 302 Certification Pursuant to the Sarbanes-Oxley Act of 2002

32.1		CEO Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code as created by the Sarbanes-Oxley Act of 2002

32.2		CFO Certification Pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code as created by the Sarbanes-Oxley Act of 2002

101		The following financial information from Ingredion Incorporated’s Quarterly Report on Form 10-Q for the quarterly period ended ~~September 30, 2014~~March 31, 2015 formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Statements of Income; (ii) the Condensed Consolidated Statements of Comprehensive Income; (iii) the Condensed Consolidated Balance Sheets; (iv) the Condensed Consolidated Statements of Equity and Redeemable Equity; (v) the Condensed Consolidated Statements of Cash Flows; and (vi) the Notes to the Condensed Consolidated Financial Statements.

3732

	Three Months Ended September 30,												Nine Months Ended September 30,
	US Plans						Non-US Plans						US Plans						Non-US Plans
(in millions)	2014			2013			2014			2013			2014			2013			2014			2013
Service cost	$	1.8		$	2.0		$	1.5		$	2.3		$	5.3		$	5.9		$	4.4		$	7.0
Interest cost	3.3			2.8			3.7			3.0			9.8			8.5			11.1			9.2
Expected return on plan assets	(5.2		)	(4.6		)	(3.6		)	(2.9		)	(15.7		)	(13.7		)	(10.7		)	(8.9		)
Amortization of net actuarial loss	0.1			0.5			0.8			1.2			0.3			1.4			2.4			3.7
Amortization of prior service credit	—			—			—			—			—			—			(0.1		)	(0.1		)
Amortization of transition obligation	—			—			0.1			0.1			—			—			0.2			0.2
Settlement	0.4			—			—			—			0.4			—			—			—
Net pension cost	$	0.4		$	0.7		$	2.5		$	3.7		$	0.1		$	2.1		$	7.3		$	11.1

	Three Months Ended September 30, 2014					Three Months Ended September 30, 2013
	Net Income					Net Income
	Available		Weighted			Available		Weighted
	to Ingredion		Average Shares	Per Share		to Ingredion		Average Shares	Per Share
(in millions, except per share amounts)	(Numerator)		(Denominator)	Amount		(Numerator)		(Denominator)	Amount

Basic EPS	$	118.6	73.0	$	1.62	$	86.3	77.3	$	1.12

Effect of Dilutive Securities:

Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs, RSAs and other awards			1.3					1.3

Diluted EPS	$	118.6	74.3	$	1.60	$	86.3	78.6	$	1.10

	Nine Months Ended September 30, 2014					Nine Months Ended September 30, 2013
	Net Income					Net Income
	Available		Weighted			Available		Weighted
	to Ingredion		Average Shares	Per Share		to Ingredion		Average Shares	Per Share
(in millions, except per share amounts)	(Numerator)		(Denominator)	Amount		(Numerator)		(Denominator)	Amount

Basic EPS	$	293.8	74.2	$	3.96	$	292.2	77.5	$	3.77

Effect of Dilutive Securities:

Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs, RSAs and other awards			1.3					1.3

Diluted EPS	$	293.8	75.5	$	3.89	$	292.2	78.8	$	3.71