UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)


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

~~FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2017~~For the quarterly period ended March 31, 2021


☐	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~~ Commission File Number 1-13397

Ingredion ~~Incorporated~~Incorporated

(Exact name of ~~Registrant~~registrant as specified in its charter)

~~DELAWARE~~Delaware

(State or other jurisdiction of incorporation or organization)

22-3514823

(I.R.S. Employer Identification Number)

5 ~~WESTBROOK CORPORATE CENTER~~Westbrook Corporate Center

~~WESTCHESTER, ILLINOIS~~Westchester, Illinois

60154

(Address of principal executive offices)

(Zip Code)

~~(708)~~ (708) 551-2600

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $.01 par value per share	INGR	New York Stock Exchange

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 ☒ No ☐

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 ☒ No ☐

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




Large accelerated filer ☒		Accelerated filer ☐

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

		Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

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


~~CLASS~~Class		~~OUTSTANDING AT OCTOBER 31, 2017~~Outstanding at April 30, 2021
Common Stock, $.01 par value		~~71,865,000~~66,975,448 shares

Table of Contents

INGREDION INCORPORATED

FORM 10-Q

~~PART I FINANCIAL INFORMATION~~

~~ITEM 1~~

~~FINANCIAL STATEMENTS~~2

Table of Contents

Ingredion Incorporated (“Ingredion”)

Condensed Consolidated Statements of (Loss) Income

(Unaudited)


	Three Months Ended
	March 31,
(in millions, except per share amounts)	2021		2020
Net sales	$	1,614	$	1,543
Cost of sales		1,263		1,220
Gross profit		351		323

Operating expenses		153		154
Other (income) expense, net		(2)		2
Restructuring/impairment charges		370		14

Operating (loss) income		(170)		153

Financing costs, net		19		18
Other, non-operating (income), net		(1)		(1)

(Loss) income before income taxes		(188)		136
Provision for income taxes		55		58
Net (loss) income		(243)		78
Less: Net income attributable to non-controlling interests		3		3
Net (loss) income attributable to Ingredion	$	(246)	$	75

Weighted average common shares outstanding:
Basic		67.3		67.1
Diluted		67.3		67.8

Earnings per common share of Ingredion:
Basic	$	(3.66)	$	1.12
Diluted	$	(3.66)	$	1.11

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in millions, except per share amounts)

2017

2016

2017

2016

Net sales before shipping and handling costs

$
1,574

$
1,569

$
4,653

$
4,537

Less: shipping and handling costs

89

80

258

233

Net sales

1,485

1,489

4,395

4,304

Cost of sales

1,097

1,120

3,282

3,241

Gross profit

388

369

1,113

1,063

Operating expenses

152

149

458

431

Other income, net

(4)

(3)

(7)

(2)

Restructuring/impairment charges

7

2

23

15

Operating income

233

221

639

619

Financing costs, net

16

15

57

48

Income before income taxes

217

206

582

571

Provision for income taxes

48

60

153

172

Net income

169

146

429

399

Less: Net income attributable to non-controlling interests

3

3

9

8

Net income attributable to Ingredion

$
166

$
143

$
420

$
391

Weighted average common shares outstanding:

Basic

71.9

72.5

72.0

72.2

Diluted

73.3

74.3

73.4

74.0

Earnings per common share of Ingredion:

Basic

$
2.31

$
1.98

$
5.83

$
5.42

Diluted

$
2.26

$
1.93

$
5.72

$
5.29

See Notes to Condensed Consolidated Financial Statements

Table of Contents

~~PART I FINANCIAL INFORMATION~~

~~ITEM 1~~

~~FINANCIAL STATEMENTS~~

Ingredion Incorporated (“Ingredion”)

Condensed Consolidated Statements of Comprehensive ~~Income (Loss)~~Loss

(Unaudited)


	Three Months Ended
	March 31,
(in millions)	2021		2020
Net (loss) income	$	(243)	$	78
Other comprehensive income:
Gains (losses) on cash flow hedges, net of income tax effect of $7 and $12, respectively		22		(34)
(Gains) losses on cash flow hedges reclassified to earnings, net of income tax effect of $ — and $2, respectively		(1)		4
Currency translation adjustment		(52)		(134)
Comprehensive loss		(274)		(86)
Less: Comprehensive income attributable to non-controlling interests		5		—
Comprehensive loss attributable to Ingredion	$	(279)	$	(86)

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in millions)

2017

2016

2017

2016

Net income

$
169

$
146

$
429

$
399

Other comprehensive income:

Losses on cash-flow hedges, net of income tax effect of $6, $9, $2, and $9, respectively

(10)

(18)

(2)

(15)

Losses on cash-flow hedges reclassified to earnings, net of income tax effect of $1, $2, $- and $9, respectively

—

4

1

18

Actuarial gains (losses) on pension and other postretirement obligations, settlements and plan amendments, net of income tax effect of $-, $-, $- and $1, respectively

—

—

1

(4)

(Gains) losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect

—

—

(1)

1

Unrealized gains on investments, net of income tax effect

—

—

1

—

Currency translation adjustment

30

9

62

68

Comprehensive income

189

141

491

467

Less: Comprehensive income attributable to non-controlling interests

3

3

9

8

Comprehensive income attributable to Ingredion

$
186

$
138

$
482

$
459

See Notes to Condensed Consolidated Financial Statements

~~PART I FINANCIAL INFORMATION~~

~~ITEM 1~~

~~FINANCIAL STATEMENTS~~4

Table of Contents

Ingredion Incorporated (“Ingredion”)

Condensed Consolidated Balance Sheets

September 30,

December 31,

(in millions, except share and per share amounts)

2017

2016

(Unaudited)

Assets

Current assets:

Cash and cash equivalents

$
491

$
512

Short-term investments

14

4

Accounts receivable, net

901

923

Inventories

825

789

Prepaid expenses

35

24

Total current assets

2,266

2,252

Property, plant and equipment, net of accumulated depreciation of $2,980 and $2,826, respectively

2,186

2,116

Goodwill

803

784

Other intangible assets, net of accumulated amortization of $130 and $106, respectively

499

502

Deferred income tax assets

7

7

Other assets

132

121

Total assets

$
5,893

$
5,782

Liabilities and equity

Current liabilities:

Short-term borrowings

$
153

$
106

Accounts payable and accrued liabilities

787

872

Total current liabilities

940

978

Non-current liabilities

180

158

Long-term debt

1,731

1,850

Deferred income tax liabilities

154

171

Share-based payments subject to redemption

30

30

Ingredion stockholders’ equity:

Preferred stock — authorized 25,000,000 shares — $0.01 par value, none issued

—

—

Common stock — authorized 200,000,000 shares — $0.01 par value, 77,810,875 issued at September 30, 2017 and December 31, 2016, respectively

1

1

Additional paid-in capital

1,140

1,149

Less: Treasury stock (common stock: 5,964,226 and 5,396,526 shares at September 30, 2017 and December 31, 2016, respectively) at cost

(504)

(413)

Accumulated other comprehensive loss

(1,009)

(1,071)

Retained earnings

3,203

2,899

Total Ingredion stockholders’ equity

2,831

2,565

Non-controlling interests

27

30

Total equity

2,858

2,595

Total liabilities and equity

$
5,893

$
5,782


	March 31,		December 31,
(in millions, except share and per share amounts)	2021		2020
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	576	$	665
Short-term investments		1		—
Accounts receivable, net		1,025		1,011
Inventories		950		917
Prepaid expenses		58		54
Total current assets		2,610		2,647

Property, plant and equipment, net of accumulated depreciation of $3,165 and $3,175, respectively		2,355		2,455
Goodwill		899		902
Other intangible assets, net of accumulated amortization of $235 and $229, respectively		437		444
Operating lease assets		182		173
Deferred income tax assets		24		23
Other assets		296		214
Total assets	$	6,803	$	6,858

Liabilities and equity
Current liabilities:
Short-term borrowings	$	448	$	438
Accounts payable and accrued liabilities		932		1,020
Total current liabilities		1,380		1,458

Non-current liabilities		219		227
Long-term debt		1,749		1,748
Non-current operating lease liabilities		145		136
Deferred income tax liabilities		219		217
Liabilities held for sale		337		—
Total liabilities		4,049		3,786

Share-based payments subject to redemption		21		30
Redeemable non-controlling interests		70		70

Ingredion stockholders’ equity:
Preferred stock — authorized 25,000,000 shares — $0.01 par value, NaN issued		—		—
Common stock — authorized 200,000,000 shares — $0.01 par value, 77,810,875 issued at March 31, 2021 and December 31, 2020, respectively		1		1
Additional paid-in capital		1,155		1,150
Less: Treasury stock (common stock: 10,737,015 and 10,795,346 shares at March 31, 2021 and December 31, 2020, respectively) at cost		(1,022)		(1,024)
Accumulated other comprehensive loss		(1,164)		(1,133)
Retained earnings		3,667		3,957
Total Ingredion stockholders’ equity		2,637		2,951
Non-redeemable non-controlling interests		26		21
Total equity		2,663		2,972
Total liabilities and equity	$	6,803	$	6,858

See Notes to Condensed Consolidated Financial Statements

~~PART I FINANCIAL INFORMATION~~

~~ITEM 1~~

~~FINANCIAL STATEMENTS~~5

Table of Contents

Ingredion Incorporated (“Ingredion”)

Condensed Consolidated Statements of Equity and Redeemable Equity

(Unaudited)


	Total Equity
													Non-
													Redeemable		Share-based		Redeemable
					Additional				Accumulated Other				Non-		Payments		Non-
	Preferred		Common		Paid-In		Treasury		Comprehensive		Retained		Controlling		Subject to		Controlling
(in millions)	Stock		Stock		Capital		Stock		Loss		Earnings		Interests		Redemption		Interests
Balance, December 31, 2020	$	—	$	1	$	1,150	$	(1,024)	$	(1,133)	$	3,957	$	21	$	30	$	70
Net (loss) attributable to Ingredion												(246)
Net income (loss) attributable to non-controlling interests														4				(1)
Dividends declared												(44)
Repurchases of common stock, net								(14)
Share-based compensation, net of issuance						5		16								(9)
Other comprehensive (loss) income										(31)				1				1
Balance, March 31, 2021	$	—	$	1	$	1,155	$	(1,022)	$	(1,164)	$	3,667	$	26	$	21	$	70

Total Equity

Share-based

Additional

Accumulated Other

Non-

Payments

Common

Paid-In

Treasury

Comprehensive

Retained

Controlling

Subject to

(in millions)

Stock

Capital

Stock

Loss

Earnings

Interests

Redemption

Balance, December 31, 2016

$
1

$
1,149

$
(413)

$
(1,071)

$
2,899

$
30

$
30

Net income attributable to Ingredion

420

Net income attributable to non-controlling interests

9

Dividends declared

(116)

(12)

Repurchases of common stock

(123)

Share-based compensation, net of issuance

(9)

32

—

Other comprehensive income

62

Balance, September 30, 2017

$
1

$
1,140

$
(504)

$
(1,009)

$
3,203

$
27

$
30


	Total Equity
													Non-
													Redeemable		Share-based		Redeemable
					Additional				Accumulated Other				Non-		Payments		Non-
	Preferred		Common		Paid-In		Treasury		Comprehensive		Retained		Controlling		Subject to		Controlling
(in millions)	Stock		Stock		Capital		Stock		Loss		Earnings		Interests		Redemption		Interests
Balance, December 31, 2019	$	—	$	1	$	1,137	$	(1,040)	$	(1,158)	$	3,780	$	21	$	31	$	—
Net income attributable to Ingredion												75
Net income attributable to non-controlling interests														3
Dividends declared												(42)
Share-based compensation, net of issuance						5		12								(8)
Other comprehensive income (loss)										(164)				(3)
Balance, March 31, 2020	$	—	$	1	$	1,142	$	(1,028)	$	(1,322)	$	3,813	$	21	$	23	$	—

Total Equity

Share-based

Additional

Accumulated Other

Non-

Payments

Common

Paid-In

Treasury

Comprehensive

Retained

Controlling

Subject to

(in millions)

Stock

Capital

Stock

Loss

Earnings

Interests

Redemption

Balance, December 31, 2015

$
1

$
1,160

$
(467)

$
(1,102)

$
2,552

$
36

$
24

Net income attributable to Ingredion

391

Net income attributable to non-controlling interests

8

Dividends declared

(101)

(6)

Share-based compensation, net of issuance

(14)

53

3

Other comprehensive income

78

(10)

Balance, September 30, 2016

$
1

$
1,146

$
(414)

$
(1,024)

$
2,842

$
28

$
27

See Notes to Condensed Consolidated Financial Statements

~~PART I FINANCIAL INFORMATION~~

~~ITEM 1~~

~~FINANCIAL STATEMENTS~~6

Table of Contents

Ingredion Incorporated (“Ingredion”)

Condensed Consolidated Statements of Cash Flows

(Unaudited)


	Three Months Ended
	March 31,
(in millions)	2021		2020
Cash provided by operating activities
Net (loss) income	$	(243)	$	78
Non-cash charges to net (loss) income:
Depreciation and amortization		52		54
Mechanical stores expense		14		13
Deferred income taxes		(4)		—
Assets held for sale impairment		360		—
Other		7		13
Changes in working capital:
Accounts receivable and prepaid expenses		(56)		(69)
Inventories		(69)		(33)
Accounts payable and accrued liabilities		(5)		17
Margin accounts		(16)		(20)
Other		(18)		12
Cash provided by operating activities		22		65

Cash used for investing activities
Capital expenditures and mechanical stores purchases, net of proceeds on disposals		(63)		(98)
Short-term investments		(1)		2
Cash used for investing activities		(64)		(96)

Cash (used for) provided by financing activities
Proceeds from borrowings		46		405
Payments on debt		(36)		(303)
Repurchases of common stock, net		(14)		—
Issuances of common stock for share-based compensation, net of settlements		7		2
Dividends paid, including to non-controlling interests		(43)		(42)
Cash (used for) provided by financing activities		(40)		62

Effects of foreign exchange rate changes on cash		(7)		(17)

(Decrease) increase in cash and cash equivalents		(89)		14

Cash and cash equivalents, beginning of period		665		264

Cash and cash equivalents, end of period	$	576	$	278

Nine Months Ended

September 30,

(in millions)

2017

2016

Cash provided by operating activities

Net income

$
429

$
399

Non-cash charges to net income:

Depreciation and amortization

156

146

Charge for fair value markup of acquired inventory

9

—

Other

54

59

Changes in working capital:

Accounts receivable and prepaid expenses

15

(56)

Inventories

(33)

(8)

Accounts payable and accrued liabilities

(92)

18

Decrease in margin accounts

10

1

Other

(24)

(17)

Cash provided by operating activities

524

542

Cash used for investing activities

Capital expenditures, net of proceeds on disposals

(222)

(197)

Short-term investments

(9)

(7)

Payments for acquisitions

(13)

—

Cash used for investing activities

(244)

(204)

Cash used for financing activities

Proceeds from borrowings

1,085

793

Payments on debt

(1,164)

(742)

Debt issuance costs

—

(4)

(Repurchase) issuance of common stock, net

(120)

21

Dividends paid (including to non-controlling interests)

(120)

(103)

Cash used for financing activities

(319)

(35)

Effects of foreign exchange rate changes on cash

18

14

(Decrease) increase in cash and cash equivalents

(21)

317

Cash and cash equivalents, beginning of period

512

434

Cash and cash equivalents, end of period

$
491

$
751

See Notes to Condensed Consolidated Financial Statements

Table of Contents

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, ~~2016.~~2020.

The unaudited Condensed Consolidated Financial Statements as of March 31, 2021 and for the three months ended March 31, 2021, and 2020, included herein were prepared by management on the same basis as the Company’s audited Consolidated Financial Statements for the year ended December 31, ~~2016~~2020, 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~~the Condensed Consolidated Statements of ~~operations~~(Loss) Income, Condensed Consolidated Statements of Comprehensive (Loss) Income, Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Equity and ~~cash flows for the interim periods ended September 30, 2017~~Redeemable Equity, and ~~2016, and the financial position~~Condensed Consolidated Statements of ~~the Company as of September 30, 2017.~~Cash Flows. The results for the interim ~~periods~~period are not necessarily indicative of the results expected for the full ~~years.~~year or any other future period.

2. ~~Recently Adopted and New~~Summary of Significant Accounting Standards and Policies

~~Recently Adopted Accounting Standards:~~ ~~In July 2015,~~For detailed information about the Company’s significant accounting standards and policies, see Note 2 of the Notes to the Consolidated Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory. This Update requires an entity to measure inventory at the lower of cost and net realizable value, removing the consideration of current replacement cost. It is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted. We adopted this UpdateStatements included in the ~~current year and it did not have a material impact~~Company’s Annual Report on ~~our audited Condensed Consolidated Financial Statements.~~

~~New Accounting Standards:~~ ~~In May 2014, the FASB issued 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. The FASB has also issued additional ASUs to provide further updates and clarification to this Update, including ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. We plan to adopt the standard as of the effective date. The standard will allow various transition approaches upon adoption. We plan to use the modified retrospective approachForm 10-K for the ~~transition to the new standard. Based on the analysis performed by the Company to date, our assessment is that the adoption of the guidance in this Update is not expected to~~year ended December 31, 2020. There have abeen no material ~~impact on the Company’s revenue recognition timing or amounts, as we have not identified any~~ changes to the ~~recognition of revenue for existing customer contracts.~~

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842),~~ ~~which supersedes Topic 840, Leases. This Update increases the transparency~~Company’s significant accounting standards and comparability of organizations by recognizing lease assets and lease liabilities on the balance sheet for leases longer than 12 months and disclosing key information about leasing arrangements. The recognition, measurement and presentation of expenses and cash flows arising from a lease by a lessee have not significantly changed. This Update is effective for annual periods beginning after December 15, 2018, with early adoption permitted. We currently plan to adopt the standard as of the effective date. Adoption will require a modified retrospective approachpolicies for the transition. We expect the adoption of the guidance in this Update to have a material impact on our Consolidated Balance Sheet as operating leases will be recognized both as assets and liabilities on the Consolidated Balance Sheet. We are in the process of quantifying the magnitude of these changes and assessing the implementation approach for accounting for these changes.three months ended March 31, 2021.

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Intangibles – Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~. This Update simplifies the subsequent measurement of Goodwill as the Update eliminates Step 2 from the goodwill impairment test. Instead, under the Update, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value,

with the loss recognized not to exceed the total amount of goodwill allocated to that reporting unit. This Update is effective for annual periods beginning after December 15, 2019, with early adoption permitted. 3.Acquisitions

~~In March 2017, the FASB issued ASU No. 2017-07,~~ ~~Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~. This Update requires an entity to change the classification of the net periodic benefit cost for pension and postretirement plans within the statement of income by eliminating the ability to net all of the components of the costs together within operating income. The Update will require the service cost component to continue to be presented within operating income, classified within either cost of sales or operating expenses depending on the employees covered within the plan. The remaining components of the net periodic benefit cost, however, must be presented in the statement of income as a non-operating income (loss) below operating income. The Update is effective for annual periods beginning after December 15, 2017, with early adoption permitted only within the first interim period for public entities. We plan to adopt this Update in 2018. When adopted, the new guidance must be applied retrospectively for all income statement periods presented. The Update will reduce the Company’s operating income and will require a new financial statement line item below operating income within the Condensed Consolidated Statements of Income for the non-operating income (loss) components. Net income within the Condensed Consolidated Statements of Income will not change upon adoption of the Update.

~~In August 2017, the FASB issued ASU No. 2017-12,~~ ~~Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.~~ ~~This Update~~ modifies accounting guidance for hedge accounting by making more hedge strategies eligible for hedge accounting, amending presentation and disclosure requirements, and changing how companies assess ineffectiveness. The intent is to simplify the application of hedge accounting and increase transparency of information about an entity’s risk management activities. The amended guidance is effective for annual periods beginning after December 15, 2018, with early adoption permitted. ~~We are in the process of assessing the effects of these updates including potential changes to existing hedging arrangement, as well as the implementation approach for accounting for these changes.~~

3. ~~Acquisitions~~

On ~~March 9, 2017,~~July 1, 2020, the Company completed its acquisition of ~~Sun Flour Industry Co., Ltd.~~a controlling interest in PureCircle Limited (“~~Sun Flour”~~PureCircle”) ~~in Thailand~~. PureCircle is one of the leading producers and innovators of plant-based stevia sweeteners for ~~$18 million. Upon~~the global food and beverage industries. To complete the closing, the Company ~~paid $13~~made a total cash payment of $208 million, innet of $14 million of cash ~~and recorded $5 million in accrued liabilities for deferred payments due to the previous owner. The Company~~acquired, which it funded ~~the acquisition primarily with~~from cash on hand. ~~The acquisition~~After the closing, the Company owns 75% of ~~Sun Flour adds~~PureCircle, with the remaining 25% owned by former PureCircle shareholders. PureCircle is consolidated by Ingredion for financial reporting purposes, with a ~~fourth manufacturing facility to our operations in Thailand. Sun Flour produces rice-based ingredients used primarily in~~corresponding redeemable non-controlling interest of $74 million recorded for the ~~food industry.~~portion not owned by the Company at the time of acquisition. The results of ~~the acquired operation~~PureCircle are ~~included in~~reported on a one-month lag within the Company’s ~~consolidated results from~~Condensed Consolidated Financial Statements during the ~~acquisition date forward within~~integration process of the ~~Asia Pacific business segment.~~

On December 29, 2016, the Company completed its acquisition of TIC Gums Incorporated (“TIC Gums”), a privately held, U.S.-based company that provides advanced texture systems to the food and beverage industry, for $396 million, net of cash acquired. The acquisition adds a manufacturing facility in both the U.S. and China. The Company funded the acquisition with proceeds from borrowings under its revolving credit agreement.companies. The results of the acquired operations are included in the Company’s consolidated results from the ~~respective~~ acquisition ~~dates forward~~date within the ~~North America and Asia Pacific business segments.~~Asia-Pacific reportable segment. Pro-forma results of operations for the acquisition have not been presented as the effect of the acquisition would not be material to the Company’s results of operations for any periods presented.

~~On November 29, 2016, the~~

The Company has completed its acquisition of Shandong Huanong Specialty Corn Development Co., Ltd. (“Shandong Huanong”) in China for $12 million in cash. The Company funded the acquisition primarily with cash on hand. The acquisition of Shandong Huanong, located in Shandong Province, adds second manufacturing facility to our operations in China. It produces starch raw material for our plant in Shanghai, which makes value-added ingredients for the food industry. The results of the acquired operation are included in the Company’s consolidated results from the acquisition date forward within the Asia Pacific business segment.

~~A preliminary~~ allocation of the purchase price to the assets acquired and liabilities assumed, ~~was made~~except for goodwill, contingent liabilities, and taxes, which are preliminarily recorded based on available information and incorporating management’s best estimates. Contingent liabilities and taxes remain preliminary pending receipt of certain information required to finalize the determination of fair value. The assets acquired and liabilities assumed ~~for each acquisition~~ in the ~~transactions~~transaction are generally recorded at their estimated acquisition date fair values, while transaction costs associated with the ~~acquisitions~~acquisition were expensed as incurred.

The purchase accounting for TIC Gums is still open, pending finalization of goodwill and taxes. All of the recorded assets and liabilities, including working capital, property, plant and equipment (“PP&E”), goodwill, and intangibles, are open for performing purchase accounting adjustments for Sun Flour. Purchase accounting adjustments for Shandong Huanong remain open to finalize the valuation of intangible assets.

Goodwill represents the amount by which the purchase price exceeds the estimated fair value of the net assets acquired. The goodwill results from synergies and other operational benefits expected to be derived from the ~~acquisitions.~~acquisition. The goodwill related to ~~TIC Gums and Shandong Huanong~~PureCircle is ~~tax deductible~~not tax-deductible due to the structure of the ~~acquisitions. The goodwill related to Sun Flour is not tax deductible.~~acquisition.

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The following table summarizes the preliminary purchase price ~~allocation~~allocations for the PureCircle acquisition ~~of TIC Gums~~ as of ~~December 29, 2016:~~March 31, 2021:

Preliminary

(in millions)

TIC Gums

Working capital (excluding cash)

$
49

Property, plant and equipment

37

Identifiable intangible assets

133

Goodwill

177

Total purchase price, net of cash

$
396



(in millions)		PureCircle
Working capital (excluding cash)	$	60
Property, plant and equipment		91
Other, net		(22)
Identifiable intangible assets		68
Goodwill		85
Total fair value, net of cash		282
Less: Non-redeemable non-controlling interests		74
Total purchase price, net of cash	$	208

The identifiable intangible assets for the acquisition of ~~TIC Gums included items such as~~a controlling interest in PureCircle include customer relationships, ~~trade names,~~tradenames, and proprietary technology. The fair values of these intangible assets were determined to be Level 3 under the fair value hierarchy. Level 3 inputs are unobservable inputs for an asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for fair value estimates to be made in situations in which there is little, if any, market activity for an asset or liability at the measurement date. ~~The following table presents~~For more information on the fair ~~values, valuation techniques,~~value hierarchy, see Note 6 of the Notes to the Condensed Consolidated Financial Statements.

During the 12 months ended December 31, 2018, the Company entered into an equity method investment with Verdient Foods, Inc. (“Verdient”) by acquiring 20% of its outstanding shares. Verdient is a Canada-based producer of pulse-based protein concentrates and ~~estimated~~flours from peas, lentils, and fava beans for human food applications. On November 3, 2020, the Company acquired the remaining ~~useful life at~~80% of the outstanding shares, as well as the leased land and buildings not owned by Verdient. To complete the closing, the Company made a total cash payment of CAD $33 million (USD $26 million), which it funded from cash on hand. The results of the acquired operation are included in the Company’s consolidated results from the acquisition date ~~for these Level 3 measurements (dollars in millions):~~

Estimated

Fair Value

Valuation Technique

Useful Life
Customer relationships

$
94

Multi-period excess earnings method

20 years
Trade names

35

Relief-from-royalty method

Indefinite
Proprietary technology

4

Relief-from-royalty method

8 years

within the North America business segment. A preliminary allocation of the purchase price to the assets acquired and liabilities assumed was made based on available information and incorporating management’s best estimates. The ~~acquisitions~~acquisition of ~~Sun Flour and Shandong Huanong~~Verdient added ~~$21~~$14 million toof goodwill and ~~identifiable intangible assets and $9~~$15 million ~~to net~~of tangible assets as of ~~their respective acquisition dates.~~

Included in the results of the acquired businesses for the nine months ended September 30, 2017 was an increase in cost of sales of $9 million relating to the sale of inventory that was adjusted to fair value at the acquisition ~~dates for each acquired business in accordance with business combination accounting rules. The fair value adjustments for the three months ended September 30, 2017 had no effect on cost of sales.~~

date. Pro-forma results of operations for the ~~acquisitions made in 2017 and 2016~~acquisition have not been presented as the effect of ~~each~~the acquisition ~~individually and in aggregate~~ would not be material to the Company’s results of operations for any periods presented.

The Company incurred $1 ~~million and $3~~ million of pre-tax acquisition and integration costs for the three ~~and nine~~ months ended ~~September 30, 2017, respectively,~~March 31, 2021, associated with ~~its recent acquisitions. In 2016,~~ the PureCircle acquisition. The Company incurred ~~$2 million~~an insignificant amount of pre-tax acquisition and integration costs for the ~~nine months ended September 30, 2016 associated with the 2015 acquisitions of Kerr Concentrates, Inc. and Penford Corporation. Pre-tax acquisition and integration costs incurred for the~~ three months ended ~~September 30, 2016 were not significant.~~March 31, 2020.

4. ~~Impairment and Restructuring Charges~~Revenue Recognition

~~For~~The Company applies the ~~three and nine months ended September 30, 2017,~~provisions of ASC 606-10, Revenue from Contracts with Customers. The Company recognizes revenue under the core principle to depict the transfer of products to customers in an amount reflecting the consideration the Company ~~recorded $7 million and $23 million, respectively, of pre-tax restructuring charges. During the first quarter of 2017, the Company implemented an organizational restructuring effort in Argentina in~~expects to receive. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a ~~more competitive cost position.~~ customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied.

The Company ~~notified~~identifies customer purchase orders, which in some cases are governed by a master sales agreement, as the local labor union of a planned reduction in workforce, which resulted in a strike by the labor union and an interruption of manufacturing activities during the second quarter of 2017. The Company finalized a new labor agreementcontracts with ~~the labor union in the second quarter, ending the strike on June 1, 2017.~~its customers. For ~~the nine months ended September 30, 2017,~~each contract, the Company ~~recorded total pre-tax restructuring-related charges in Argentina~~considers the transfer of ~~$17 million for employee-related severance and other costs. No additional charges were recorded~~products, each of which is distinct, to be the identified performance obligation. In determining the transaction price for the ~~three months ended September 30, 2017.~~

~~During the second quarter of 2017,~~performance obligation, the Company ~~announced a Finance Transformation initiative in North America for~~evaluates whether the ~~U.S. and Canada businesses~~price is subject to ~~strengthen organizational capabilities and drive efficiencies~~adjustment to ~~support~~determine the ~~growth strategy~~ ofconsideration to which the Company. For the three and nine months ended September 30, 2017, the Company recorded pre-tax restructuring charges of $4 million ($3 million of severance costs and $1 million of other costs) and $5 million ($3 million of severance costs and $2 million of other costs), respectively, related to this initiative. The Company expects to ~~incur between $~~3 ~~million~~be entitled. The pricing model can be fixed or variable within the contract. The variable pricing model is based on historical commodity pricing and $5 ~~million~~is determinable prior to completion of ~~employee-related severance~~the performance obligation. Additionally, the Company has certain sales adjustments for volume incentive discounts and other ~~costs~~discount arrangements that reduce the transaction price. The reduction of the transaction price is estimated using the expected value method based on an analysis of historical volume incentives or discounts, over a period of time considered adequate to account for current pricing and business trends. Historically, actual volume incentives and discounts relative to those estimated and included when determining the transaction price have not materially differed. Volume incentives and discounts are accrued at the

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satisfaction of the performance obligation and accounted for in Accounts payable and accrued liabilities in the ~~fourth quarter~~Condensed Consolidated Balance Sheets. These amounts were not significant as of ~~2017~~March 31, 2021 or December 31, 2020. The product price as specified in the contract, net of any discounts, is considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar circumstances. Payment is received shortly after the performance obligation is satisfied; therefore, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component.

Revenue is recognized when the Company’s performance obligation is satisfied and ~~between $1 million~~control is transferred to the customer, which occurs at a point in time, either upon delivery to an agreed upon location or to the customer. Further, in determining whether control has transferred, the Company considers if there is a present right to payment and ~~$2 million in 2018~~legal title, along with risks and rewards of ownership having transferred to the customer.

Shipping and handling activities related to ~~this initiative.~~contracts with customers represent fulfillment costs and are recorded in Cost of sales. Taxes assessed by governmental authorities and collected from customers are accounted for on a net basis and excluded from revenues. The Company applies a practical expedient to expense costs to obtain a contract as incurred as most contracts are one year or less. These costs primarily include the Company’s internal sales force compensation. Under the terms of these programs, such costs are generally earned and the costs are recognized at the time the revenue is recognized.

~~Additionally, for the three months ended September 30, 2017,~~From time to time, the Company ~~recorded $3 million of other pre-tax restructuring costs including employee-related severance costs in North America. For~~may enter into long-term contracts with its customers. Historically, the ~~nine months ended September 30, 2017,~~contracts entered into by the Company ~~recorded $1 million of other pre-tax restructuring charges including other employee-related severance costs~~do not result in ~~North America~~significant contract assets or liabilities. Any such arrangements are accounted for in Other assets or Accounts payable and ~~a refinement of estimates for prior year restructuring activities.~~

~~During~~accrued liabilities in the third quarter of 2016, the Company recorded $2 million of restructuring charges for employee-related severance and other costs due to the execution of global information technology (“IT”) outsourcing contracts. For the nine months ended September 30, 2016, the Company recorded $15 million of restructuring charges consisting of $10 million of employee-related severance and other costs due to the execution of global IT outsourcing contracts, $3 million of employee-related severance costs associated with the Company’s optimization initiative in South America and $2 million of costs attributable to the 2015 Port Colborne plant sale.

~~A summary of the Company’s severance accrual~~Condensed Consolidated Balance Sheets. There were no significant contract assets or liabilities as of ~~September 30, 2017 is as follows (in millions):~~March 31, 2021 or December 31, 2020.

Balance in severance accrual as of December 31, 2016

$
7

Restructuring charge for employee-related severance costs:

Argentina

15

North America Finance Transformation

3

Other

2

Prior year restructuring activities

(2)

Payments made to terminated employees

(14)

Balance in severance accrual as of September 30, 2017

$
11

~~Of the $11 million severance accrual as of September 30, 2017, $9 million is expected to be paid in the next 12 months.~~

5. ~~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~~4 reportable business segments: North America, South America, ~~Asia Pacific~~Asia-Pacific and Europe, Middle East and Africa (“EMEA”). ~~Its~~The nature, amount, timing and uncertainty of the Company’s Net sales are managed by the Company primarily based on its geographic segments. Each region’s product sales are unique to each region and have unique risks.


	Three Months Ended
	March 31,
(in millions)	2021		2020
Net sales to unaffiliated customers:
North America	$	945	$	963
South America		273		237
Asia-Pacific		235		189
EMEA		161		154
Total net sales	$	1,614	$	1,543

5. Restructuring and Impairment Charges

For the three months ended March 31, 2021, the Company recorded $370 million of pre-tax impairment and restructuring charges. These charges included impairment charges of $360 million related to held for sale treatment of net assets expected to be contributed to an unconsolidated joint venture in the third quarter of 2021, as described below, and pre-tax restructuring charges of $10 million primarily related to the Company’s Cost Smart program.

For the three months ended March 31, 2020, the Company recorded $14 million of pre-tax restructuring and impairment charges. These charges included $9 million of pre-tax restructuring and impairment charges for the Company’s Cost Smart Cost of sales program, and $5 million of pre-tax restructuring and impairment charges for the Company’s Cost Smart selling, general, and administrative expense (“SG&A”) program.

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Impairment Charges

On February 12, 2021, the Company signed an agreement with an affiliate of Grupo Arcor, an Argentine food company, to establish a joint venture to combine manufacturing operations in Argentina in order to sell value-added ingredients to customers in Argentina, Chile and Uruguay. The joint venture will be 51% owned by Grupo Arcor and 49% owned by Ingredion. The joint venture will operate 5 manufacturing facilities that produce value-added ingredients including glucose syrups, maltose, fructose, starch, and maltodextrins, among others, that are marketed to the food, beverage, pharmaceutical and other industries. The joint venture will be managed by a jointly-appointed team of executives. Subject to the satisfaction of regulatory approvals and other closing conditions, the joint venture transaction is expected to close in the third quarter of 2021.

In connection with its entry into the joint venture agreement, the Company has classified the assets and liabilities to be transferred to the joint venture as held for sale in its Condensed Consolidated Financial Statements during the three months ended March 31, 2021. Accordingly, the Company recorded those assets and liabilities at fair value, less estimated transaction costs, resulting in an impairment charge of $360 million, of which $311 million was related to the required valuation allowance of the cumulative translation losses associated with the contributed net assets and $49 million was related to the write-down of the contributed net assets to the agreed upon fair value. The non-cash impairment charge is subject to finalization based on ending balances and foreign exchange impacts until the transaction closes. The Company recorded the impairment within Restructuring/impairment charges in the Condensed Consolidated Statements of (Loss) Income for the three months ended March 31, 2021. The held for sale assets and liabilities were classified within the Company’s South America reportable business segment.

The following table presents the major classes of assets and liabilities classified as held for sale for the joint venture agreement. Assets classified as held for sale are included in Other assets and liabilities held for sale are included in Liabilities held for sale on the Condensed Consolidated Balance Sheets as of March 31, 2021.



(in millions)	March 31, 2021
Cash and cash equivalents	$	2
Accounts receivable, net		36
Inventories		26
Prepaid expenses		1
Property, plant and equipment, net		57
Other assets		1
Impairment provision to record at fair value, less cost to sell		(49)
Assets held for sale	$	74

Accounts payable	$	22
Accrued liabilities		4
Impairment provision related to cumulative translation losses		311
Liabilities held for sale	$	337

During the year ended December 31, 2020, the Company identified property, plant and equipment assets within the Stockton, California and Lane Cove, Australia locations that met the held for sale criteria. The Company expects to sell these assets at a fair value equal to or greater than the carrying value and did 0t record a gain or loss associated with the reclassification of these assets to held for sale. The value of these assets as of March 31, 2021 is $8 million. The assets are reported within Other assets on the Condensed Consolidated Balance Sheets. A total of $82 million of assets held for sale, including the held for sale assets described above, were reported within Other assets as of March 31, 2021. During April 2021, the Company completed the sale of the property, plant and equipment held for sale at the Stockton, California location and sold the assets for more than the carrying value.

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Restructuring Charges

For the three months ended March 31, 2021, the Company recorded a total of $10 million of pre-tax restructuring charges. The Company recorded pre-tax restructuring charges of $5 million for its Cost Smart SG&A program. These costs consist primarily of other costs, including professional services costs.

The Company also recorded $3 million of pre-tax restructuring charges for its Cost Smart Cost of sales program for the three months ended March 31, 2021. These costs were primarily in the Company’s North America segment, ~~includes businesses~~of which $2 million related to the reorganization of North America’s supply chain.

For the three months ended March 31, 2021, the Company also recorded $2 million of pre-tax restructuring charges, consisting of $1 million of employee severance and $1 million of other costs, related to the planned joint venture transaction.

For the three months ended March 31, 2020, the Company recorded a total of $14 million of pre-tax restructuring and impairment charges. The Company recorded $9 million of pre-tax restructuring charges related to its Cost Smart Cost of sales program. The Company recorded $5 million of pre-tax restructuring charges in relation to the closure of the Lane Cove, Australia production facility, consisting of $3 million of asset write-offs, $1 million of accelerated depreciation, and $1 million of other costs. The Company also recorded an additional $4 million of pre-tax restructuring charges, primarily in North America, during the three months ended March 31, 2020. These costs included $3 million of accelerated depreciation and $1 million of professional services.

For the three months ended March 31, 2020, the Company also recorded pre-tax restructuring charges of $5 million for its Cost Smart SG&A program. These costs included $3 million of other costs, including professional services, and $2 million of severance. These charges were recorded primarily in the ~~U.S., Canada and Mexico.~~ Company’s North America operations.

A summary of the Company’s employee-related severance accrual as of March 31, 2021 is as follows (in millions):


Balance in severance accrual as of December 31, 2020	$	12
Joint venture related		1
Payments made to terminated employees		(4)
Balance in severance accrual as of March 31, 2021	$	9

The ~~Company’s South America segment includes businesses~~entire $9 million severance accrual as of March 31, 2021 is expected to be paid in ~~Brazil, Colombia, Ecuador and~~ the Southern Cone of South America, which includes Argentina, Chile, Peru and Uruguay. Its Asia Pacific segment includes businesses in South Korea, Thailand, China, Japan, Indonesia, the Philippines, Singapore, Malaysia, India, Australia and New Zealand. The Company’s EMEA segment includes businesses in Germany, the United Kingdom, Pakistan, South Africa and Kenya. The Company does not aggregate its operating segments when determining its reportable segments. Net sales by product are not presented because to do so would be impracticable. next 12 months.

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in millions)

2017

2016

2017

2016

Net sales to unaffiliated customers:

North America

$
903

$
899

$
2,689

$
2,634

South America

257

276

740

731

Asia Pacific

189

185

555

534

EMEA

136

129

411

405

Total

$
1,485

$
1,489

$
4,395

$
4,304

Operating income:

North America

$
179

$
164

$
520

$
474

South America

26

27

44

59

Asia Pacific

29

29

88

87

EMEA

26

25

83

80

Corporate

(19)

(22)

(61)

(64)

Subtotal

241

223

674

636

Restructuring charges

(7)

(2)

(23)

(15)

Acquisition/integration costs

(1)

—

(3)

(2)

Charge for fair value markup of acquired inventory

—

—

(9)

—

Total

$
233

$
221

$
639

$
619

As of

As of

(in millions)

September 30, 2017

December 31, 2016

Total assets

North America

$
3,699

$
3,796

South America

877

809

Asia Pacific

796

697

EMEA

521

480

Total

$
5,893

$
5,782

6. Financial Instruments, Derivatives and Hedging Activities

The Company is exposed to market risk stemming from changes in commodity prices (primarily corn and natural gas), foreign currency exchange rates and interest rates. In the normal course of business, the Company actively manages its exposure to these market risks by entering into various hedging transactions, authorized under established policies that place ~~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-related futures, options and swap contracts, foreign currency-related forward contracts, interest rate swaps, and ~~Treasury lock agreements~~treasury locks (“T-Locks”).

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 12 to 24 months. The Company maintains a commodity-price risk management strategy that uses derivative instruments to minimize significant, unanticipated earnings fluctuations caused by commodity-price volatility. To manage price risk related to corn purchases primarily in North America, the Company uses corn futures and ~~options~~option contracts that trade on regulated commodity exchanges to lock-in ~~its~~ corn costs associated with ~~firm-priced~~fixed-priced customer sales contracts. The Company also uses over-the-counter natural gas swaps in North America to hedge a portion of its natural gas ~~usage in North America.~~usage. These derivative financial instruments limit the impact that volatility resulting from fluctuations in market prices will have on corn and natural gas ~~purchases~~purchases. The Company’s natural gas derivatives and the majority of its corn derivatives have been designated as ~~cash-flow hedges.~~ cash flow hedging instruments.

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The Company ~~also~~ enters into ~~futures contracts to hedge~~certain corn derivative instruments that are not designated as hedging instruments as defined by ASC 815, Derivatives and Hedging. Therefore, the realized and unrealized gains and losses from these instruments are recognized in cost of sales during each accounting period. These derivative instruments also mitigate commodity price risk ~~associated with fluctuations in the market price~~related to anticipated purchases of ~~ethanol. Unrealized~~corn.

For commodity hedges designated as cash flow hedges, unrealized gains and losses associated with marking the commodity hedging contracts to market (fair value) are recorded as a component of other comprehensive ~~income~~loss (“~~OCI”~~OCL”) and included in the equity section of the Condensed Consolidated Balance Sheets as part of ~~accumulated~~Accumulated other comprehensive ~~income/~~loss (“~~AOCI”~~AOCL”). These amounts are subsequently reclassified into earnings in the same line item affected by the hedged transaction and in the same period or periods during which the hedged transaction affects earnings, or in the month a hedge is determined to be ineffective. The Company assesses the effectiveness of a commodity hedge contract based on changes in the contract’s fair value. The changes in the market value of such contracts have historically been, and are expected to continue to be,

highly effective at offsetting changes in the price of the hedged items. Gains and losses from cash flow hedging instruments reclassified from AOCL to earnings are reported as Cash provided by operating activities on the Condensed Consolidated Statements of Cash Flows.

As of March 31, 2021, the Company had outstanding futures and option contracts that hedged the forecasted purchase of approximately 81 million bushels of corn and outstanding swap and option contracts that hedged the forecasted purchase of approximately 33 million mmbtu’s of natural gas.

Foreign currency hedging: Due to the Company’s global operations, including operations in many emerging markets, the Company is exposed to fluctuations in foreign currency exchange rates. As a result, the Company has exposure to translational foreign-exchange risk when the results of its foreign operations are translated to U.S. dollars and to transactional foreign-exchange risk when transactions not denominated in the functional currency are revalued. The ~~amounts representing the ineffectiveness of these cash-flow hedges are not significant.~~

~~At September 30, 2017, AOCI included $5 million of losses (net of income taxes of $4 million), pertaining~~Company’s foreign-exchange risk management strategy uses derivative financial instruments such as foreign currency forward contracts, swaps and options to ~~commodities-related~~manage its transactional foreign exchange risk. The Company enters into foreign currency derivative instruments that are designated as ~~cash-flow hedges. At~~both cash flow hedging instruments as well as instruments not designated as hedging instruments as defined by ASC 815, Derivatives and Hedging, in order to mitigate transactional foreign-exchange risk. Gains and losses from derivative financial instruments not designated as hedging instruments are marked to market in earnings during each accounting period.

The Company hedges certain assets using foreign currency derivatives not designated as hedging instruments, which had a notional value of $487 million and $410 million as of March 31, 2021 and December 31, ~~2016, the amount included in AOCI pertaining to these commodities-related derivative instruments~~2020, respectively. The Company also hedges certain liabilities using foreign currency derivatives not designated as ~~cash-flow~~hedging instruments, which had a notional value of $276 million and $224 million as of March 31, 2021 and December 31, 2020, respectively.

The Company hedges ~~was not significant.~~certain assets using foreign currency cash flow hedging instruments, which had a notional value of $256 million and $401 million as of March 31, 2021 and December 31, 2020, respectively. The Company also hedges certain liability positions using foreign currency cash flow hedging instruments, which had a notional value of $422 million and $542 million as of March 31, 2021 and December 31, 2020, respectively.

Interest rate hedging: The Company assesses its exposure to variability in interest rates by identifying and monitoring changes in interest rates that may adversely impact future cash flows and the fair value of existing debt instruments, and by evaluating hedging opportunities. The Company’s risk management strategy is to monitor interest rate risk attributable to both the Company’s outstanding and forecasted debt obligations as well as the Company’s offsetting hedge positions. Derivative financial instruments that have been used by the Company to manage its interest rate risk consist of interest rate swaps and T-Locks.

The Company ~~has~~periodically enters into interest rate ~~swap agreements that effectively convert the interest rates on $200 million of~~swaps to hedge its ~~$400 million of 4.625 percent senior notes due November 1, 2020,~~exposure to variable rates. These swap agreements call for the Company to receive interest at the fixed coupon rate of the respective notes and to pay interest at a variable rate based on the six-month U.S. dollar LIBOR rate plus a spread. The Company has designated these interest rate ~~swap agreements as hedges of the~~changes. 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~~gains or ~~loss~~losses (the ~~change~~changes in fair value) of the hedged debt ~~instrument~~instruments that isare attributable to changes in interest rates (the hedged risk), which isare also recognized in earnings. As of March 31, 2021 and December 31, 2020, the Company did not have any outstanding interest rate swaps. During the year ended December 31, 2020, the Company had an outstanding interest rate swap agreement that converted the interest rates on $200 million of its $400 million 4.625% senior notes due November 1, 2020, to variable rates. The Company redeemed these notes in July 2020 and settled the outstanding interest rate swap.

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The Company periodically enters into T-Locks to hedge its exposure to interest rate changes. The T-Locks are designated as hedges of the variability in cash flows associated with future interest payments caused by market fluctuations in the benchmark interest rate until the fixed interest rate is established, and are accounted for as cash flow hedges. Accordingly, changes in the fair value of ~~these interest rate swap agreements at September 30, 2017 and December 31, 2016 was $3 million and $3 million, respectively, and is reflected in~~ the ~~Condensed Consolidated Balance Sheets within other assets, with an offsetting amount~~T-Locks are recorded ~~in long-term debt~~ to ~~adjust~~AOCL until the ~~carrying amount~~consummation of the ~~hedged~~underlying debt ~~obligations.~~offering, at which time any realized gain (loss) is amortized to earnings over the life of the debt. The Company did not have ~~any T-Locks~~ outstanding ~~at September 30, 2017~~T-locks as of March 31, 2021 or December 31, ~~2016.~~

~~At September~~2020. T-locks outstanding as of March 31, 2020 were settled during the three months ended June 30, 2017, AOCI included $3 million of losses (net of income taxes of $2 million), related to settled T-Locks. At December 31, 2016, AOCI included $4 million of losses (net of income taxes of $2 million), related to settled T-Locks. These deferred losses are2020. The corresponding realized loss was recorded in AOCL and is being amortized to ~~financing costs~~earnings over the ~~terms~~life of the senior notes ~~with which they are associated.~~sold.

~~Foreign currency hedging~~: Due to the Company’s global operations, including 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 operations are translated to U.S. dollars and to transactional foreign exchange risk when transactions not denominated in the functional currency are revalued. The ~~Company primarily uses~~ derivative ~~financial~~ instruments such as foreign currency forward contracts, swaps and options to manage its transactional foreign exchange risk. At September 30, 2017, the Company had foreign currency forward sales contracts that are designated as ~~fair value~~cash flow hedges ~~with an aggregate notional amount~~included in AOCL as of ~~$447 million~~March 31, 2021 and ~~foreign currency forward purchase contracts with an aggregate notional amount of $173 million that hedged transactional exposures. At~~ December 31, 2016, the Company had foreign currency forward sales contracts with an aggregate notional amount of $432 million and foreign currency forward purchase contracts with an aggregate notional amount of $227 million that hedged transactional exposures. 2020 are reflected below:


Derivatives in Cash Flow Hedging Relationships		Gains (Losses) included in AOCL
(in millions)		March 31, 2021	December 31, 2020
Commodity contracts, net of income tax effect of $24 and $16, respectively	$	67	$	47
Foreign currency contracts, net of income tax effect of $1 and $ — , respectively		-		(1)
Interest rate contracts, net of income tax effect of $1		(4)		(4)
Total	$	63	$	42

The Company also has foreign currency derivative instruments that hedge certain foreign currency transactional exposures and are designated as cash-flow hedges. At September 30, 2017, AOCI included an insignificant amount of losses relating to these hedges. At December 31, 2016, AOCI included $3 million of losses, net of tax, relating to these hedges.

The fair value and balance sheet location of the Company’s derivative instruments, presented gross in the Condensed Consolidated Balance Sheets, are reflected below:


	Fair Value of Hedging Instruments as of March 31, 2021
	Designated Hedging Instruments (in millions)						Non-Designated Hedging Instruments (in millions)
Balance Sheet Location		Commodity Contracts		Foreign Currency Contracts	Total			Commodity Contracts		Foreign Currency Contracts	Total
Accounts receivable, net	$	54	$	1	$	55	$	3	$	7	$	10
Other assets		1		1		2		—		1		1
Assets		55		2		57		3		8		11
Accounts payable and accrued liabilities		2		4		6		1		10		11
Non-current liabilities		1		—		1		—		1		1
Liabilities		3		4		7		1		11		12
Net (Liabilities)/Assets	$	52	$	(2)	$	50	$	2	$	(3)	$	(1)


	Fair Value of Hedging Instruments as of December 31, 2020
	Designated Hedging Instruments (in millions)						Non-Designated Hedging Instruments (in millions)
Balance Sheet Location		Commodity Contracts		Foreign Currency Contracts	Total			Commodity Contracts		Foreign Currency Contracts	Total
Accounts receivable, net	$	50	$	7	$	57	$	3	$	4	$	7
Other assets		4		—		4		—		1		1
Assets		54		7		61		3		5		8
Accounts payable and accrued liabilities		4		12		16		1		8		9
Non-current liabilities		2		—		2		—		2		2
Liabilities		6		12		18		1		10		11
Net (Liabilities)/Assets	$	48	$	(5)	$	43	$	2	$	(5)	$	(3)

Fair Value of Derivative Instruments

Fair Value

Fair Value

Derivatives designated as

   As of

   As of

   As of

   As of

hedging instruments:

Balance Sheet

September 30,

December 31,

Balance Sheet

September 30,

December 31,

(in millions)

Location

2017

2016

Location

2017

2016

Commodity and foreign currency

Accounts receivable, net

$
14

$
31

Accounts payable and accrued liabilities

$
28

$
25

Commodity, foreign currency, and interest rate contracts

Other assets

7

8

Non-current liabilities

7

2

Total

$
21

$
39

$
35

$
27

~~At September 30, 2017, the Company had outstanding futures and option contracts that hedged the forecasted purchase~~Table of approximately 65 million bushels of corn and 20 million pounds of soybean oil. The Company is unable to directly hedge price risk related to co-product sales; however, it occasionally enters into hedges of soybean oil (a competing product to corn oil) in order to mitigate the price risk of corn oil sales. The Company also had outstanding swap and option contracts that hedged the forecasted purchase of approximately 21 million mmbtu’s of natural gas at September 30, 2017. Additionally at September 30, 2017, the Company had outstanding ethanol futures contracts that hedged the forecasted sale of approximately 8 million gallons of ethanol.Contents

Additional information relating to the Company’s derivative instruments is presented below:


					Location of Gains
	Amount of Gains (Losses)				(Losses)	Amount of Gains (Losses)
Derivatives in Cash-Flow	Recognized in OCI				Reclassified from	Reclassified from AOCI into Income

Derivatives in Cash Flow										Gains (Losses) Recognized in OCL on Derivatives				Income	Gains (Losses) Reclassified from AOCL into Income
Hedging Relationships	Three Months Ended		Three Months Ended		AOCI	Three Months Ended		Three Months Ended		Three Months Ended March 31,				Statement	Three Months Ended March 31,
(in millions, pre-tax)	September 30, 2017		September 30, 2016		into Income	September 30, 2017		September 30, 2016
(in millions)										2021		2020		Location	2021		2020
Commodity contracts	$	(18)	$	(27)	Cost of sales	$	—	$	(5)	$	27	$	(37)	Cost of sales	$	(1)	$	7
Foreign currency contracts		2		—	Net sales/Cost of sales		1		—		2		(5)	Net sales/Cost of sales		2		(1)
Interest rate contracts		—		—	Financing costs, net		—		(1)		—		(4)	Financing costs, net		—		—
Total	$	(16)	$	(27)		$	1	$	(6)	$	29	$	(46)		$	1	$	6

Derivatives in Fair Value Hedging

Income Statement Location of

Gains (Losses) Recognized in Income

Income Statement

Gains (Losses) Recognized in Income

Relationships

Derivatives Designated as

Three Months Ended March 31,

Location

Three Months Ended March 31,

(in millions)

Hedging Instruments

2021

2020

of Hedged Items

2021

2020

Interest rate contracts

Financing costs, net

—

Financing costs, net

—

(3)

Location of Gains

Amount of Gains (Losses)

(Losses)

Amount of Gains (Losses)

Derivatives in Cash-Flow

Recognized in OCI

Reclassified from

Reclassified from AOCI into Income

Hedging Relationships

Nine Months Ended

Nine Months Ended

AOCI

Nine Months Ended

Nine Months Ended

(in millions, pre-tax)

September 30, 2017

September 30, 2016

into Income

September 30, 2017

September 30, 2016

Commodity contracts

$
(7)

$
(25)

Cost of sales

$
(1)

$
(25)

Foreign currency contracts

3

1

Net sales/Cost of sales

1

(1)

Interest rate contracts

—

—

Financing costs, net

(1)

(1)

Total

$
(4)

$
(24)

$
(1)

$
(27)

~~At September 30, 2017, AOCI~~As of March 31, 2021, AOCL included $5$64 million of ~~losses~~net gains (net of income taxes of $3$23 million) on settled commodities-related ~~derivative~~derivatives instruments, foreign currency hedges, and T-Locks designated as cash-flow hedges that are expected to be reclassified into earnings during the next 12 months. The Company expects the losses to be offset by changes in the underlying commodities costs. The Company also has $1 million of losses on settled T-Locks (net of income taxes of $1 million) recorded in AOCI at September 30, 2017, which are expected to be reclassified into earnings during the next 12 months. Additionally, at September 30, 2017, AOCI included an insignificant amount of losses related to foreign currencycash flow hedges that are expected to be reclassified into earnings during the next 12 months.

Fair Value Measurements:Presented below are the fair values of the Company’s financial instruments and derivatives ~~for~~as of the ~~periods~~dates presented:


	As of September 30, 2017								As of December 31, 2016

																	As of March 31, 2021								As of December 31, 2020
(in millions)	Total		Level 1 (a)		Level 2 (b)		Level 3 (c )		Total		Level 1 (a)		Level 2 (b)		Level 3 (c )		Total		Level 1 (a)		Level 2 (b)		Level 3 (c)		Total		Level 1 (a)		Level 2 (b)		Level 3 (c)
Available for sale securities	$	9	$	9	$	—	$	—	$	7	$	7	$	—	$	—	$	12	$	12	$	—	$	—	$	11	$	11	$	—	$	—
Derivative assets		21		4		17		—		39		6		33		—		68		53		15		—		69		53		16		—
Derivative liabilities		35		9		26		—		27		11		16		—		19		2		17		—		29		3		26		—
Long-term debt		1,832		—		1,832		—		1,929		—		1,929		—		1,919		—		1,919		—		1,751		—		1,751		—

(a)

Level 1 inputs consist of quoted prices (unadjusted) in active markets for identical assets or liabilities.

(b)

Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. Level 2 inputs are based on quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability or can be derived principally from or corroborated by observable market data.

(c)

Level 3 inputs are unobservable inputs for the asset or liability. Unobservable inputs ~~shall be~~are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date.

The carrying values of cash equivalents, short-term investments, accounts receivable, accounts payable and short-term borrowings approximate fair values. Commodity futures, options, and swap contracts are recognized at fair value. Foreign currency forward contracts, swaps and options are also recognized at fair value. The fair value of the Company’s ~~long-term~~Long-term debt is estimated based on quotations of major securities dealers who are market makers in the securities. ~~At September 30, 2017,~~As of March 31, 2021, the carrying value and fair value of the Company’s ~~long-term~~Long-term debt was approximately $1.7 billion and $1.9 billion, respectively.

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7. Debt

Presented below are the Company’s debt carrying amounts, net of related discounts, premiums, and debt issuance costs as of March 31, 2021 and December 31, 2020:


	As of		As of
(in millions)	March 31, 2021		December 31, 2020
2.900% senior notes due June 1, 2030	$	594	$	594
3.200% senior notes due October 1, 2026		497		497
3.900% senior notes due June 1, 2050		390		390
6.625% senior notes due April 15, 2037		253		253
Revolving credit facility		—		—
Other long-term borrowings		15		14
Total long-term debt		1,749		1,748
Term loan credit agreement due April 12, 2021		—		380
Amended term loan credit agreement due March 15, 2022		380		—
Other short-term borrowings		68		58
Total short-term borrowings		448		438
Total debt	$	2,197	$	2,186

On March 16, 2021, the Company amended and restated its term loan credit agreement (the “Amended Term Loan Credit Agreement”). The Amended Term Loan Credit Agreement restates the previous agreement by extending the maturity date of the borrowings under the previous agreement until March 15, 2022. No new borrowings under the Amended Term Loan Credit Agreement were ~~$1,731~~incurred in connection with the amendment and restatement. Borrowings under the Amended Term Loan Credit Agreement bear interest at a variable annual rate based on London Interbank Offering Rate (“LIBOR”) or a base rate, at the Company’s election, subject to the terms and conditions thereof, plus, in each case, an applicable margin. The Amended Term Loan Credit Agreement reduces the applicable interest rate margin for loans accruing interest based on LIBOR from 0.80 percent to 0.75 percent. The Company is required to pay a fee on the unused availability under the Amended Term Loan Credit Agreement. The Amended Term Loan Credit Agreement contains customary representations, warranties, covenants and events of default, including covenants restricting the incurrence of liens, the incurrence of indebtedness by the Company’s subsidiaries and certain fundamental changes involving the Company and its subsidiaries, subject to certain exceptions in each case. The Company must also maintain a specified maximum consolidated leverage ratio and a specified minimum consolidated interest coverage ratio. As of March 31, 2021, the Company was in compliance with these financial covenants. The occurrence of an event of default under the Amended Term Loan Credit Agreement could result in all loans and other obligations being declared due and payable and the term loan credit facility being terminated.

Other short-term borrowings as of March 31, 2021 and December 31, 2020, primarily include amounts outstanding under various unsecured local country operating lines of credit.

8. Leases

The Company determines if an arrangement is a lease at inception of the agreement. Operating leases are included in operating lease assets, and current and non-current operating lease liabilities in the Company’s Condensed Consolidated Balance Sheets. Lease assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The operating lease asset value includes in its calculation any prepaid lease payments made and any lease incentives received from the arrangement as a reduction of the asset. The Company’s lease terms may include options to extend or terminate the lease, and the impact of these options is included in the lease liability and lease asset calculations when the exercise of the option is at the Company’s sole discretion and it is reasonably certain that the Company will exercise that option. The Company will not separate lease and non-lease

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components for its leases when it is impracticable to separate the two, such as for leases with variable payment arrangements. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

The Company has operating leases for certain rail cars, office space, warehouses, and machinery and equipment. The commencement date used for the calculation of the lease obligations recorded is the latter of the commencement date of the new standard (January 1, 2019) or the lease start date. Certain of the leases have options to extend the life of the lease, which are included in the liability calculation when the option is at the sole discretion of the Company and it is reasonably certain that the Company will exercise the option. The Company has certain leases that have variable payments based solely on output or usage of the leased asset. These variable operating lease assets are excluded from the Company’s balance sheet presentation and expensed as incurred. The Company currently has 0 finance leases.

Lease expense for lease payments is recognized on a straight-line basis over the lease term. The components of lease expense were as follows for the periods presented:


	Three Months Ended
Lease Cost	March 31,
(in millions)	2021		2020
Operating lease cost	$	14	$	13
Variable operating lease cost		7		8
Short term lease cost		1		1
Lease cost	$	22	$	22

The following is a reconciliation of future undiscounted cash flows to the operating lease liabilities and the related operating lease assets as presented on the Condensed Consolidated Balance Sheet as of March 31, 2021.


Operating Leases		As of
(in millions)		March 31, 2021
2021 (Excluding the three months ended March 31, 2021)	$	39
2022		45
2023		35
2024		25
2025		17
Thereafter		53
Total future lease payments		214
Less imputed interest		24
Present value of future lease payments		190
Less current lease liabilities		45
Non-current operating lease liabilities	$	145
Operating lease assets	$	182

Additional information related to the Company’s operating leases is listed below.


	Three Months Ended
Other Information	March 31,
($ in millions)	2021			2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	14		$	13
Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	21		$	8
	As of			As of
	March 31, 2021			December 31, 2020
Weighted average remaining lease term:
Operating leases		6.3 years			5.5 years
Weighted average discount rate:
Operating leases		4.6	%		4.9	%

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9. Taxes

The Company’s effective tax rate for the three months ended March 31, 2021 was (29.3) percent compared to 42.6 percent for the three months ended March 31, 2020. The primary change in the effective tax rate was driven by the $360 million impairment related to the held for sale treatment of net assets that will be contributed to the joint venture, as described in Note 5 of the Notes to the Condensed Consolidated Financial Statements. There was no corresponding income tax benefit recorded with respect to the impairment. The remaining decrease in the effective income tax rate compared to the three months ended March 31, 2020, was driven by the relatively lower decrease in value of the Mexican peso against the U.S. dollar and ~~$1,832~~a reduction in the Company’s U.S. global intangible low-taxed income (“GILTI”) recorded in accordance with the applicable final U.S. Treasury regulations. During the three months ended March 31, 2020, the Mexican peso decreased in value against the U.S. dollar by 24 percent, compared to 3 percent during the three months ended March 31, 2021. Because the Company uses the U.S. dollar as the functional currency for its subsidiaries in Mexico, its effective income tax rate is strongly influenced by the remeasurement of the Mexican peso financial statements into U.S. dollars. In addition, the decrease in value of the Mexican peso produced substantial taxable translation gains on net-U.S.-dollar-monetary assets held in Mexico, for which there was no corresponding gain in pre-tax income. These items were partially offset by a change in the mix of earnings and including the consolidation of PureCircle and Verdient from their respective dates, as described in Note 3 of the Notes to the Condensed Consolidated Financial Statements.

10. Net Periodic Pension and Postretirement Benefit Costs

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


	Three Months Ended March 31,
	U.S. Plans				Non-U.S. Plans
(in millions)	2021		2020		2021		2020
Service cost	$	1	$	1	$	1	$	1
Interest cost		2		3		3		3
Expected return on plan assets		(5)		(5)		(2)		(2)
Amortization of actuarial loss		—		—		1		—
Net periodic benefit cost (a)	$	(2)	$	(1)	$	3	$	2

The Company currently anticipates that it will make approximately $4 million ~~respectively.~~ in cash contributions to its pension plans in 2021, consisting of contributions of $3 million to its non-U.S. pension plans and $1 million to its U.S. pension plans. For the three months ended March 31, 2021,cash contributions of approximately $1 million were made to the non-U.S. plans and an insignificant amount to the U.S. plans.

7. ~~Share-Based Compensation~~The following table sets forth the components of net postretirement benefit cost for the periods presented:


	Three Months Ended March 31,
(in millions)	2021		2020
Service cost	$	—	$	—
Interest cost		1		1
Amortization of prior service credit		(1)		(1)
Net periodic benefit cost (a)	$	—	$	—

(a)

The service cost component of net periodic benefit cost is presented within either cost of sales or operating expenses on the Condensed Consolidated Statements of (Loss) Income. The interest cost, expected return on plan assets, amortization of prior service credit, and amortization of actuarial loss components of net periodic benefit cost are presented as other, non-operating income on the Condensed Consolidated Statements of (Loss) Income.

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11. Inventories

Inventories are summarized as follows:


	As of		As of
(in millions)	March 31, 2021		December 31, 2020
Finished and in process	$	573	$	584
Raw materials		283		236
Manufacturing supplies and other		94		97
Total inventories	$	950	$	917

12. Equity

Treasury stock: On October 22, 2018, the Board of Directors authorized a new stock repurchase program permitting the Company to purchase up to 8 million of its outstanding shares of common stock from November 5, 2018 through December 31, 2023. The parameters of the Company’s stock repurchase program are not established solely with reference to the dilutive impact of shares issued under the Company’s stock incentive plan. However, the Company expects that, over time, share repurchases will offset the dilutive impact of shares issued under the stock incentive plan.

During the three months ended March 31, 2021, the Company repurchased 158 thousand outstanding shares of common stock in open market transactions at a net cost of $14 million. During the three months ended March 31, 2020, the Company did 0t repurchase shares of common stock.

Share-based payments:The following table summarizes the components of the Company’s share-based compensation expense for the periods presented:


	Three Months Ended
	March 31,
(in millions)	2021		2020
Stock options:
Pre-tax compensation expense	$	1	$	1
Income tax benefit		—		—
Stock option expense, net of income taxes		1		1

Restricted stock units ("RSUs"):
Pre-tax compensation expense		3		3
Income tax benefit		—		(1)
RSUs, net of income taxes		3		2

Performance shares and other share-based awards:
Pre-tax compensation expense		1		2
Income tax benefit		—		—
Performance shares and other share-based compensation expense, net of income taxes		1		2

Total share-based compensation:
Pre-tax compensation expense		5		6
Income tax benefit		—		(1)
Total share-based compensation expense, net of income taxes	$	5	$	5

Stock Options:Under the Company’s stock incentive plan, stock options are granted at exercise prices that equal the market value of the underlying common stock on the date of grant. The options have a 10-year term and are exercisable upon vesting, which occurs over a three-year period at the anniversary dates of the date of grant. Compensation expense is generally recognized on a straight-line basis for all awards over the employee’s vesting period or over a one-year required service period for certain ~~retirement eligible~~retirement-eligible executive level employees. The Company estimates a forfeiture rate

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at the time of grant and updates the estimate throughout the vesting period of the stock options within the amount of compensation costs recognized in each period.

The Company granted non-qualified options to purchase ~~278~~358 thousand shares and ~~329~~336 thousand shares ~~during~~for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 and ~~2016,~~2020, respectively. The fair value of each option grant for the periods presented was estimated using the Black-Scholes option-pricing model with the following ~~assumptions:~~assumptions at the date of grant:


	For the Nine Months Ended
	September 30,
	2017		2016

					Three Months Ended March 31,
					2021		2020
Expected life (in years)	5.5		5.5		5.5		5.5
Risk-free interest rate	1.93	%	1.36	%	0.6	%	1.4	%
Expected volatility	22.50	%	23.40	%	23.2	%	19.8	%
Expected dividend yield	1.68	%	1.80	%	2.9	%	2.9	%

The expected life of options represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and the Company’s historical exercise patterns. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the grant date for the period corresponding to the expected life of the options. Expected volatility is based on historical volatilities of the Company’s common stock. Dividend ~~yields are~~yield is based on current dividend ~~payments.~~payments at the date of grant.

Stock option activity for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 was as follows:


		Weighted
		Average		Average	Aggregate
	Number of	Exercise		Remaining	Intrinsic
	Options	Price per		Contractual	Value
	(in thousands)	Share		Term (Years)	(in millions)
Outstanding as of December 31, 2016	2,281	$	61.39	5.93	$	145

							Number of Options (in thousands)	Weighted Average Exercise Price per Share		Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (in millions)
Outstanding as of December 31, 2020							2,238	$	86.55	5.15	$	14
Granted	278		117.65				358		87.12
Exercised	(299)		46.10				(154)		56.35
Cancelled	(21)		87.50				(27)		94.39
Outstanding as of September 30, 2017	2,239	$	70.17	5.94	$	113
Exercisable as of September 30, 2017	1,671	$	58.04	5.33	$	105
Outstanding as of March 31, 2021							2,415	$	88.68	5.89	$	20
Exercisable as of March 31, 2021							1,775	$	88.90	4.66	$	19

For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021, cash received from the exercise of stock options was ~~$14~~approximately $9 million. ~~At September 30, 2017,~~As of March 31, 2021, the ~~total remaining~~ unrecognized compensation cost related to non-vested stock options ~~was $5~~totaled $6 million, which ~~will~~is expected to be amortized over ~~a weighted average~~the weighted-average period of approximately ~~1.4~~1.9 years.

Additional information pertaining to stock option activity is as ~~follows:~~follows for the periods presented:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,

									Three Months Ended
									March 31,
(dollars in millions, except per share)	2017		2016		2017		2016		2021		2020
Weighted average grant date fair value of stock options granted (per share)	$	—	$	—	$	23.90	$	18.73	$	12.31	$	11.48
Total intrinsic value of stock options exercised		11		21		23		45	$	5	$	4

Restricted Stock Units: The Company has granted restricted stock units (“RSUs”) to certain key employees. The RSUs are primarily subject to cliff vesting, generally after three years, provided the employee remains in the service of the Company. Compensation expense is generally recognized on a straight-line basis for all awards over the employee’s vesting period or over a one-year required service period for certain ~~retirement eligible~~retirement-eligible executive level employees. The Company estimates a forfeiture rate at the time of grant and updates the estimate throughout the vesting period of the RSUs within the amount of compensation costs recognized in each period. The fair value of the RSUs is determined based upon the number of shares granted and the ~~quoted~~ market price of the Company’s common stock aton the date of the grant.

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The following table summarizes RSU activity for the ~~nine~~three months ended ~~September 30, 2017:~~March 31, 2021:


		Weighted
		Average
	Number of	Fair Value

(RSUs in thousands)	RSUs	per Share		Number of Restricted Shares	Weighted Average Fair Value per Share
Non-vested as of December 31, 2016	429	$	81.04
Non-vested as of December 31, 2020				418	$	96.45
Granted	121		119.24	214		87.25
Vested	(148)		64.94	(83)		126.67
Cancelled	(13)		93.70	(12)		91.19
Non-vested as of September 30, 2017	389	$	99.77
Non-vested as of March 31, 2021				537	$	88.28

~~At September 30, 2017,~~As of March 31, 2021, the total remaining unrecognized compensation cost related to RSUs was ~~$17~~$30 million, which will be amortized over a weighted average period of approximately ~~1.8~~2.2 years.

Performance Shares: The Company has a long-term incentive plan for senior management in the form of performance ~~shares. The ultimate payments for~~shares. Historically these performance shares ~~awarded and~~ vested ~~will be~~ based solely on the Company’s ~~stock performance~~total shareholder return as compared to the ~~stock performance~~total shareholder return of its peer ~~group.~~group over the three-year vesting period. Beginning with the 2019 performance share grants, the vesting of the performance shares is based on 2 performance metrics. NaN percent of the performance shares awarded will vest based on the Company’s total shareholder return as compared to the total shareholder return of its peer group, and the remaining 50 percent will vest based on the calculation of the Company’s three-year average Adjusted Return on Invested Capital (“Adjusted ROIC”) against an established Adjusted ROIC target. The 2021 performance shares were granted in 2 tranches. The first tranche was split evenly between awards based on the Company’s total shareholder return and Adjusted ROIC awards. The second tranche of performance share awards will vest 100% based on the calculation of Adjusted ROIC against the target.

For the 2021 performance shares awarded based on the Company’s total shareholder return, the number of shares that ultimately vest can range from ~~zero~~0 to 200 percent of the awarded grant depending on the Company’s ~~stock performance~~total shareholder return as compared to the ~~stock performance~~total shareholder return of ~~the~~its peer group. The share award vesting will be calculated at the end of the three-year period and ~~are~~is subject to approval by management and the Compensation ~~Committee.~~Committee of the Board of Directors. Compensation expense is based on the fair value of the performance shares at the grant date, established using a Monte Carlo simulation model. The total compensation expense for these awards is amortized over a three-year graded vesting schedule.

For the 2021 performance shares awarded based on Adjusted ROIC, the number of shares that ultimately vest can range from 0 to 200 percent of the awarded grant depending on the Company’s Adjusted ROIC performance against the target. The share award vesting will be calculated at the end of the three-year period and is subject to approval by management and the Compensation Committee. Compensation expense is based on the market price of the Company’s common stock on the date of the grant and the final number of shares that ultimately vest. The Company will estimate the potential share vesting at least annually to adjust the compensation expense for these awards over the vesting period to reflect the Company’s estimated Adjusted ROIC performance against the target. The total compensation expense for these awards is amortized over a three-year graded vesting schedule.

For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021, the Company awarded 38108 thousand ~~share units~~performance shares at a weighted average fair value of ~~$114.08~~$100.29 per ~~share unit.~~share.

The 2014 performance share award vested in the first quarter of 2017, achieving a 200 percent pay out of the grant, or 115 thousand total vested shares. There were no performance share cancellations during the nine months ended September 30, 2017.

As of ~~September 30, 2017,~~March 31, 2021, the unrecognized compensation cost related to these awards was $4$12 million, which will be amortized over the remaining requisite service ~~periods~~period of ~~1.8~~2.5 years.

The ~~following table summarizes~~2018 performance share awards vested during the ~~components~~three months ended March 31, 2021, achieving a 0 percent payout of the ~~Company’s share-based compensation expense:~~granted performance shares. Additionally, there were 2 thousand performance share cancellations during the three months ended March 31, 2021.

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in millions)

2017

2016

2017

2016

Stock options:

Pre-tax compensation expense

$
2

$
2

$
6

$
7

Income tax benefit

(1)

(1)

(2)

(3)

Stock option expense, net of income taxes

1

1

4

4

RSUs:

Pre-tax compensation expense

4

3

10

9

Income tax benefit

(2)

(1)

(4)

(3)

RSUs, net of income taxes

2

2

6

6

Performance shares and other share-based awards:

Pre-tax compensation expense

1

2

4

5

Income tax benefit

(1)

(1)

(2)

(2)

Performance shares and other share-based compensation expense, net of income taxes

—

1

2

3

Total share-based compensation:

Pre-tax compensation expense

7

7

20

21

Income tax benefit

(4)

(3)

(8)

(8)

Total share-based compensation expense, net of income taxes

$
3

$
4

$
12

$
13

8. ~~Net Periodic Pension~~21

Table of Contents

Accumulated Other Comprehensive Loss: The following is a summary of net changes in Accumulated other comprehensive loss by component and ~~Postretirement Benefit Costs~~

~~For detailed information about the Company’s pension and postretirement benefit plans, please refer to Note 10~~net of ~~the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K~~tax for the ~~year~~three months ended ~~December~~March 31, ~~2016.~~2021 and 2020:


(in millions)	Cumulative Translation Adjustment		Hedging Activities		Pension and Postretirement Adjustment		Accumulated Other Comprehensive Loss
Balance, December 31, 2020	$	(1,114)	$	42	$	(61)	$	(1,133)
Other comprehensive (loss) gain before reclassification adjustments		(52)		29		—		(23)
(Gain) reclassified from accumulated OCL		—		(1)		—		(1)
Tax (provision)		—		(7)		—		(7)
Net other comprehensive (loss) income		(52)		21		—		(31)
Balance, March 31, 2021	$	(1,166)	$	63	$	(61)	$	(1,164)


(in millions)	Cumulative Translation Adjustment		Hedging Activities		Pension and Postretirement Adjustment		Accumulated Other Comprehensive Loss
Balance, December 31, 2019	$	(1,089)	$	(9)	$	(60)	$	(1,158)
Other comprehensive (loss) before reclassification adjustments		(134)		(46)		—		(180)
Loss reclassified from accumulated OCL		—		6		—		6
Tax benefit		—		10		—		10
Net other comprehensive loss		(134)		(30)		—		(164)
Balance, March 31, 2020	$	(1,223)	$	(39)	$	(60)	$	(1,322)

Supplemental Information: The following ~~table sets forth~~Condensed Consolidated Statements of Equity and Redeemable Equity provide the ~~components of net periodic benefit cost of the U.S. and non-U.S. defined benefit pension plans~~dividends per share for common stock for the periods presented:

Three Months Ended

Nine Months Ended

September 30,

September 30,

U.S. Plans

Non-U.S. Plans

U.S. Plans

Non-U.S. Plans

(in millions)

2017

2016

2017

2016

2017

2016

2017

2016

Service cost

$
1

$
2

$
1

$
1

$
4

$
5

$
3

$
2

Interest cost

3

3

3

3

9

10

8

8

Expected return on plan assets

(5)

(5)

(3)

(3)

(15)

(15)

(8)

(8)

Amortization of actuarial loss

—

—

—

—

—

—

1

1

Settlement loss

—

—

—

—

—

—

—

2

Net periodic benefit cost

$
(1)

$
—

$
1

$
1

$
(2)

$
—

$
4

$
5


	Total Equity
													Non-
									Accumulated				Redeemable		Share-based		Redeemable
					Additional				Other				Non-		Payments		Non-
	Preferred		Common		Paid-In		Treasury		Comprehensive		Retained		Controlling		Subject to		Controlling
(in millions)	Stock		Stock		Capital		Stock		Loss		Earnings		Interests		Redemption		Interests
Balance, December 31, 2020	$	—	$	1	$	1,150	$	(1,024)	$	(1,133)	$	3,957	$	21	$	30	$	70
Net (loss) attributable to Ingredion												(246)
Net income attributable to non-controlling interests														4				(1)
Dividends declared, common stock ($0.64/share)												(44)
Repurchases of common stock								(14)
Share-based compensation, net of issuance						5		16								(9)
Other comprehensive loss										(31)				1				1
Balance, March 31, 2021	$	—	$	1	$	1,155	$	(1,022)	$	(1,164)	$	3,667	$	26	$	21	$	70

The Company currently anticipates that it will make approximately $5 million in cash contributions to its pension plans in 2017, consisting of $4 million to its non-U.S. pension plans and $1 million to its U.S. pension plans. For the nine

~~months ended September 30, 2017,cash contributions~~Table of ~~approximately $3 million were made to the non-U.S. plans and $1 million to the U.S. plans.~~Contents


	Total Equity
													Non-
									Accumulated				Redeemable		Share-based		Redeemable
					Additional				Other				Non-		Payments		Non-
	Preferred		Common		Paid-In		Treasury		Comprehensive		Retained		Controlling		Subject to		Controlling
(in millions)	Stock		Stock		Capital		Stock		Loss		Earnings		Interests		Redemption		Interests
Balance, December 31, 2019	$	—	$	1	$	1,137	$	(1,040)	$	(1,158)	$	3,780	$	21	$	31	$	—
Net income attributable to Ingredion												75
Net income attributable to non-controlling interests														3
Dividends declared, common stock ($0.63/share)												(42)
Repurchases of common stock
Share-based compensation, net of issuance						5		12								(8)
Other comprehensive loss										(164)				(3)
Balance, March 31, 2020	$	—	$	1	$	1,142	$	(1,028)	$	(1,322)	$	3,813	$	21	$	23	$	—

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

Three Months Ended

Nine Months Ended

September 30,

September 30,

(in millions)

2017

2016

2017

2016

Service cost

$
1

$
—

$
1

$
1

Interest cost

—

1

2

2

Amortization of prior service credit

—

(1)

(2)

(3)

Net periodic benefit cost

$
1

$
—

$
1

$
—

9. ~~Earnings per Common Share~~

Supplemental Information:The following table provides the computation of basic and diluted earnings per common share ("EPS") for the periods presented:


	Three Months Ended September 30, 2017					Three Months Ended September 30, 2016
	Net Income					Net Income

	Available		Weighted	Per Share		Available		Weighted	Per Share		Three Months Ended March 31, 2021					Three Months Ended March 31, 2020
(in millions, except per share amounts)	to Ingredion		Average Shares	Amount		to Ingredion		Average Shares	Amount		Net Income Available to Ingredion		Weighted Average Shares	Per Share Amount		Net Income Available to Ingredion		Weighted Average Shares	Per Share Amount

Basic EPS	$	166	71.9	$	2.31	$	143	72.5	$	1.98	$	(246)	67.3	$	(3.66)	$	75	67.1	$	1.12


Effect of Dilutive Securities:
Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards			1.4					1.8					—					0.7

Diluted EPS	$	166	73.3	$	2.26	$	143	74.3	$	1.93	$	(246)	67.3	$	(3.66)	$	75	67.8	$	1.11

Nine Months Ended September 30, 2017

Nine Months Ended September 30, 2016

Net Income

Net Income

Available

Weighted

Per Share

Available

Weighted

Per Share

(in millions, except per share amounts)

to Ingredion

Average Shares

Amount

to Ingredion

Average Shares

Amount

Basic EPS

$
420

72.0

$
5.83

$
391

72.2

$
5.42

Effect of Dilutive Securities:

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

1.4

1.8

Diluted EPS

$
420

73.4

$
5.72

$
391

74.0

$
5.29

~~For the three and nine months ended September 30, 2017, approximately 0.3~~Approximately 2.1 million and ~~0.3~~1.5 million share-based awards of common stock ~~respectively,~~ were excluded from the calculation of diluted EPS as the impact of their inclusion would have been ~~anti-dilutive. For both~~anti-dilutive for the three ~~and nine~~ months ended ~~September 30, 2016,~~March 31, 2021 and 2020, respectively.

13. Segment Information

The Company is principally engaged in the ~~number~~production and sale of ~~share-based awards~~starches and sweeteners for a wide range of ~~common stock excluded from~~industries, and is managed geographically on a regional basis. The Company’s operations are classified into 4 reportable business segments: North America, South America, Asia-Pacific, and EMEA. Its North America segment includes businesses in the ~~calculation~~U.S., Mexico, and Canada. The Company’s South America segment includes businesses in Brazil, Colombia, Ecuador, and the Southern Cone of ~~diluted EPS was~~South America, which includes Argentina, Peru, Chile, and Uruguay. Its Asia-Pacific segment includes businesses in South Korea, Thailand, China, Australia, Japan, Indonesia, Singapore, the Philippines, India, Malaysia, New Zealand, and Vietnam. The Company’s EMEA segment includes businesses in Pakistan, Germany, the United Kingdom, South Africa, and Kenya. The Company has aggregated the PureCircle operating segment into the Asia-Pacific reportable segment. Net sales by product are not ~~material.~~presented because to do so would be impracticable.

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Presented below are the Company’s net sales to unaffiliated customers by reportable segment for the three months ended March 31, 2021 and 2020.

~~10.~~ ~~Inventories~~


	Three Months Ended
	March 31,
(in millions)	2021		2020
Net sales to unaffiliated customers:
North America	$	945	$	963
South America		273		237
Asia-Pacific		235		189
EMEA		161		154
Total net sales	$	1,614	$	1,543

Presented below is the Company’s operating income by reportable segment for the three months ended March 31, 2021, and 2020.


	Three Months Ended
	March 31,
(in millions)	2021		2020
Operating income:
North America	$	134	$	125
South America		40		26
Asia-Pacific		25		20
EMEA		31		27
Corporate		(29)		(31)
Subtotal		201		167
Acquisition/integration costs		(1)		—
Restructuring/impairment charges		(10)		(14)
Impairment charges related to assets classified as held for sale		(360)		—
Total operating income	$	(170)	$	153

~~Inventories~~Presented below are ~~summarized~~the Company’s total assets by reportable segment as ~~follows:~~

As of September 30,

As of December 31,

(in millions)

2017

2016

Finished and in process

$
497

$
478

Raw materials

274

260

Manufacturing supplies and other

54

51

Total inventories

$
825

$
789

~~11.~~ ~~Debt~~

As of ~~September 30, 2017~~March 31, 2021, and December 31, ~~2016, the Company’s total debt consisted of the following:~~2020.


	As of		As of
(in millions)	March 31, 2021		December 31, 2020
Assets:
North America (a)	$	4,240	$	4,231
South America		751		818
Asia-Pacific		1,257		1,255
EMEA		555		554
Total assets	$	6,803	$	6,858

As of September 30,

As of December 31,

(in millions)

2017

2016

3.2% senior notes due October 1, 2026

$
496

$
496

4.625% senior notes due November 1, 2020

398

398

1.8% senior notes due September 25, 2017

—

299

6.625% senior notes due April 15, 2037

254

254

6.0% senior notes due April 15, 2017

—

200

5.62% senior notes due March 25, 2020

200

200

Term loan credit agreement due April 25, 2019

380

—

Revolving credit facility

—

—

Fair value adjustment related to hedged fixed rate debt instruments

3

3

Long-term debt

$
1,731

$
1,850

Short-term borrowings

153

106

Total debt

$
1,884

$
1,956

(a)

For purposes of presentation, North America includes Corporate assets.

~~The $200 million of 6.0 percent senior notes due~~

14. Subsequent Events

On April ~~15, 2017 were refinanced with borrowings under the revolving credit facility in April 2017.~~

~~On August 18, 2017,~~1, 2021, the Company ~~entered into~~acquired KaTech, a ~~new Term Loan Credit Agreement (“Term Loan”)~~privately-held company headquartered in Germany. KaTech provides advanced texture and stabilization solutions to ~~establish a senior unsecured term loan credit facility. Under~~ the ~~Term Loan,~~food and beverage industry. To complete the purchase, the Company ~~is allowed three borrowings~~made a total cash payment of EUR 36 million ($42 million), which it funded from cash on hand. KaTech’s operational results will be recorded in ~~an amount of up to $500 million total. The Term Loan matures 18 months from~~ the ~~date of the final borrowing. As of September 30, 2017,~~EMEA segment.

On May 3, 2021, the Company ~~had initiated two borrowings under the Term Loan totaling $380 million. The proceeds were used~~signed an agreement with Amyris to ~~refinance $300 million of 1.8 percent senior notes due September 25, 2017 and pay down borrowings outstanding on the revolving credit facility. On October 25, 2017,~~enter into an exclusive license to sell Amyris, Inc.’s zero-calorie, nature-based, fermented Reb M sweetener. Additionally, the Company ~~initiated its third and final borrowing under~~will obtain a 31 percent ownership in Amyris, Inc.’s Brazilian manufacturing facility. The transaction is expected to close during the ~~Term Loan~~second quarter of ~~$40 million, bringing the total outstanding Term Loan to $420 million, due April 25, 2019.~~2021.

All borrowings under the term loan facility will bear interest at a variable annual rate based on the LIBOR or base rate, at the Company’s election, subject to the terms and conditions thereof, plus, in each case, an applicable margin. The Term Loan Credit Agreement contains customary representations, warranties, covenants, events of default, terms and conditions, including limitations on liens, incurrence of debt, mergers and significant asset dispositions. The Company must also comply with a leverage ratio and interest coverage ratio. The occurrence of an event of default under the Term Loan Credit Agreement could result in all loans and other obligations being declared due and payable and the term loan credit facility being terminated.

~~12.~~ ~~Accumulated Other Comprehensive Loss~~

~~The following is a summary of net changes in accumulated other comprehensive loss by component and net of tax for the three and nine months ended September 30, 2017 and 2016:~~

Deferred

Unrealized

Accumulated

Cumulative

Gain (Loss)

Pension and

Gain

Other

Translation

on Hedging

Postretirement

on

Comprehensive

(in millions)

Adjustment

Activities

Adjustment

Investment

Loss

Balance, December 31, 2016

$
(1,008)

$
(7)

$
(56)

$
—

$
(1,071)

Other comprehensive income (loss) before reclassification adjustments

62

(4)

1

1

60

Amount reclassified from accumulated OCI

—

1

(1)

—

—

Tax benefit

—

2

—

—

2

Net other comprehensive income (loss)

62

(1)

—

1

62

Balance, September 30, 2017

$
(946)

$
(8)

$
(56)

$
1

$
(1,009)

Deferred

Unrealized

Accumulated

Cumulative

Gain (Loss)

Pension and

Loss

Other

Translation

on Hedging

Postretirement

on

Comprehensive

(in millions)

Adjustment

Activities

Adjustment

Investment

Loss

Balance, December 31, 2015

$
(1,025)

$
(29)

$
(47)

$
(1)

$
(1,102)

Other comprehensive income (loss) before reclassification adjustments

78

(24)

(5)

—

49

Amount reclassified from accumulated OCI

—

27

1

—

28

Tax benefit

—

—

1

—

1

Net other comprehensive income (loss)

78

3

(3)

—

78

Balance, September 30, 2016

$
(947)

$
(26)

$
(50)

$
(1)

$
(1,024)

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

Amount

Amount

Reclassified from

Reclassified from

AOCI

AOCI

Three Months Ended

Nine Months Ended

Affected Line Item in

Details about AOCI Components

September 30,

September 30,

Condensed Consolidated

(in millions)

2017

2016

2017

2016

Statements of Income

Gains (losses) on cash-flow hedges:

Commodity contracts

$
—

$
(6)

$
(1)

$
(25)

Cost of sales

Foreign currency contracts

1

—

1

(1)

Net sales/Cost of sales

Interest rate contracts

—

—

(1)

(1)

Financing costs, net

Gains (losses) related to pension and other postretirement obligations

—

—

1

(1)

(a)

Total before-tax reclassifications

$
1

$
(6)

$
—

$
(28)

Tax (provision) benefit

(1)

2

—

9

Total after-tax reclassifications

$
—

$
(4)

$
—

$
(19)

~~(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~~.

Table of Contents

ITEM 2

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

~~Overview~~Unless the context indicates otherwise, references to “we,” “us,” “our,” the “Company” and “Ingredion” mean Ingredion Incorporated and its consolidated subsidiaries.

Overview

We are a major supplier of high-quality food and industrial ingredient solutions to customers around the world. WeAs of March 31, 2021, we have 4446 manufacturing ~~plants~~facilities located in North America, South America, ~~Asia Pacific~~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, brewing, and animal ~~feed, paper and corrugating, and brewing~~nutrition industries, among others.

Our ~~Strategic Blueprint continues to guide our decision-making~~strategic growth roadmap is based on five growth platforms and ~~strategic choices with an emphasis on value-added ingredient solutions for our customers. The foundation of our Strategic Blueprint~~ is operating 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 with on-trend products through internal and external business development. Finally, we look for growth from geographic expansion as we pursue extension of our reach to new locations. The ultimate goal of these strategies and actions isdesigned to deliver ~~increased~~ shareholder ~~value.~~value by accelerating customer co-creation and enabling consumer-preferred innovation. Our first platform is starch-based texturizers, the second platform is clean and simple ingredients, the third platform is plant-based proteins, the fourth platform is sugar reduction and specialty sweeteners, and finally, our fifth platform is value-added food systems.

~~We had a solid third quarter and nine~~For the three months ended ~~September 30, 2017 as~~March 31, 2021, operating income, net income and diluted earnings per ~~common~~ share ~~grew~~decreased from the comparable ~~2016 periods.~~ 2020 period. The decreases for this period were primarily attributable to a $360 million held for sale impairment charge related to the Arcor joint venture in Argentina discussed below, including the write off of $311 million of cumulative translation losses.

COVID-19: Our ~~earnings growth was driven principally~~operations in recent periods have been adversely affected by ~~continued strong~~impacts of the coronavirus disease 2019 (“COVID-19”) pandemic. Our global operations expose us to risks associated with public health crises such as COVID-19. Foreign governmental organizations and governmental organizations at the national, state and local levels in the United States have taken various actions to combat the spread of COVID-19, including imposing stay-at-home orders and closing “non-essential” businesses and their operations. As a manufacturer of food ingredients, our operations are considered “essential” under most current COVID-19 government regulations, and our facilities are operating ~~results~~globally. We did not experience any material supply chain interruptions during the three months ended March 31, 2021, and were able to continue to operate and ship products from our global network of manufacturing facilities. We place top priority on our employees’ health and safety and continue to follow the advice and the guidelines of public health authorities for physical distancing and to make available personal protective equipment and sanitization supplies. We continue to monitor COVID-19 infection rates as well as the pace and effectiveness of vaccination rollouts, as the net sales volume is generally correlated with increased consumer activity and availability of food and beverages consumed away from home.

Impairment Charges: On February 12, 2021, we signed an agreement with Grupo Arcor, an Argentine food company, to establish a joint venture to combine manufacturing operations in Argentina in order to sell value-added ingredients to customers in Argentina, Chile and Uruguay. In connection with our entry into the joint venture agreement, we classified the assets and liabilities to be transferred to the joint venture as held for sale in our ~~North America segment~~Condensed Consolidated Financial Statements during the ~~year,~~three months ended March 31, 2021. Accordingly, we recorded those assets and ~~partially offset by lower earnings~~liabilities at fair value, less estimated transaction costs, resulting in an impairment charge of $360 million, of which $311 million was related to the required valuation allowance of the cumulative translation losses associated with the contributed net assets and $49 million was related to the write-down of the contributed net assets to the agreed upon fair value. The non-cash impairment charge is subject to finalization based on ending balances and foreign exchange impacts until the transaction closes. We recorded the impairment within Restructuring/impairment charges in the Condensed Consolidated Statements of (Loss) Income for the three months ended March 31, 2021 included in this report. The assets and liabilities held for sale are recorded in our Condensed Consolidated Balance Sheets as of March 31, 2021 included in this report in Other assets and Liabilities held for sale, respectively. The assets and liabilities held for sale were classified under our South America ~~segment due~~reportable business segment.

Restructuring Charges: In July 2018, we announced a $125 million savings target for our Cost Smart program, designed to ~~continued difficult macroeconomic conditions~~improve profitability, further streamline our global business, and deliver increased value to stockholders. We set Cost Smart savings targets to include an anticipated $75 million in Cost of sales savings, including freight, and $50

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million in anticipated SG&A savings by year-end 2021. Since the program’s inception, we have periodically updated our savings targets and we now expect to deliver $170 million in total savings by year-end 2021.

Our Cost Smart program and other initiatives have resulted in restructuring charges. For the three months ended March 31, 2021, we recorded a total of $8 million of pre-tax restructuring charges related to these programs, a decrease of $6 million from the restructuring charges recorded during the three months ended March 31, 2020. We recorded $5 million of restructuring charges related for our Cost Smart SG&A program, primarily related to professional service costs in ~~Argentina. The Company implemented an organizational restructuring effort in Argentina~~North America during the first quarter of 2017 to achieve a more competitive cost position in the region. We notified the local labor union of a planned reduction in workforce, which resulted in a strike by the labor union and an interruption of manufacturing activities during the second quarter of 2017. We finalized a new labor agreement with the labor union in the second quarter, ending the strike on June 1, 2017. The Company recorded total pre-tax employee-related severance and other costs in Argentina of $17 million for the ninethree months ended ~~September 30, 2017,~~March 31, 2021, and $3 million of restructuring charges for our Cost Smart Cost of sales program, primarily related to the ~~workforce reduction. Operating income also grew in our EMEA and Asia Pacific segments.~~

~~During the second quarter~~reorganization of ~~2017, the Company announced a Finance Transformation initiative in the~~ North ~~America for the U.S. and Canada businesses to strengthen organizational capabilities and drive efficiencies to support the growth strategy~~ ~~of the Company. The Company recorded $4 million of employee-related severance and other restructuring costs~~America’s supply chain during the ~~third quarter of 2017 related to this initiative. We expect to incur between $3 million~~three months ended March 31, 2021.

Liquidity and ~~$5 million of additional employee-related severance and other costs in the fourth quarter of 2017 and between $1 million and $2 million in 2018 related to this initiative.~~

Capital Resources: Our cash provided by operating activities decreased to ~~$524~~$22 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021, from ~~$542~~$65 million infor the ~~year-earlier period, driven by an increase of cash outflow in working capital~~prior year, primarily due to ~~the outflow~~changes in ~~accounts payable and accrued liabilities~~our working capital. Our cash used for investing activities decreased to $64 million for the ~~$63~~three months ended March 31, 2021, from $96 million ~~payment made to~~for the ~~Internal Revenue Service (“IRS”) in~~prior year, primarily as a result of the ~~third quarter~~timing of ~~2017 to complete the double taxation settlement between the U.S.~~capital expenditures and ~~Canada. This outflow was partially offset by increased earnings in the period.~~mechanical stores purchases. Our cash used for financing activities ~~increased~~was $40 million during the ~~nine~~three months ended ~~September 30, 2017, primarily due~~March 31, 2021, compared to cash provided by financing activities of $62 million in the prior year. This decrease was mainly driven by lower net borrowings during the current period, as well as the repurchase of ~~approximately one million~~158 thousand outstanding shares of ~~our~~ common stock ~~in open market transactions for $123~~at a net cost of $14 million during the first quarter of 2017. During the second and third quarters, we also refinanced a total of $500 million of senior notes with borrowings under our revolving credit facility and a new term loan entered into during the third quarter. period.

On March 9, 2017, the Company completed its acquisition of Sun Flour Industry Co., Ltd. (“Sun Flour”) in Thailand for $18 million. Upon closing, the Company paid $13 million in cash and recorded $5 million in accrued liabilities for deferred payments due to the previous owner. The acquisition of Sun Flour adds a fourth manufacturing facility to our operations in Thailand. Sun Flour produces rice-based ingredients used primarily in the food industry. This transaction will enhance our global supply chain and leverage other capital investments that we have made in Thailand to grow our specialty ingredients and service customers around the world. The acquisition did not have a material impact on our financial condition, results of operations or cash flows in the third quarter of 2017.

Looking ahead, we anticipate that our full year 2017 operating income and net income will grow compared to 2016. In North America, we expect full year operating income to increase driven by improved product mix and margins. In South America, we believe that full year operating income will be down compared to 2016 driven by temporary higher-than-normal costs related to the interruption of manufacturing activities in Argentina and the restructuring charges incurred to improve the cost position of the operation in Argentina. We will continue to focus on network optimization and cost improvement in this segment for the remainder of the year. In the longer term, we believe that the underlying business demographics for our South American segment are positive. We expect full-year operating income to grow in EMEA principally driven by improved price/product mix from our specialty ingredient product portfolio, volume growth and effective cost control. In Asia Pacific, we expect full-year operating income to increase, driven by volume growth and effective cost control.

Results of Operations

We have significant operations in four reporting segments: North America, South America, ~~Asia Pacific~~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 U.S. dollars at the applicable average exchange rates for the period. Fluctuations in foreign currency exchange rates affect the U.S. dollar amounts of our foreign subsidiaries’ revenues and expenses. The impact of foreign currency ~~exchange rate changes,~~translation to the reporting currency, where significant, is provided below.

We acquired ~~Shandong Huanong Specialty Corn Development Co., Ltd. (“Shandong Huanong”), TIC Gums Incorporated (“TIC Gums”)~~a controlling interest in PureCircle on July 1, 2020 and ~~Sun Flour~~Verdient on November ~~29, 2016, December 29, 2016 and March 9, 2017, respectively.~~3, 2020. The results of the acquired businesses are included in our consolidated financial results from the respective acquisition ~~dates forward.~~dates. While we identify ~~fluctuations due to~~the effects of the acquisitions, our discussion below also addresses results of operations ~~absent~~excluding the impact of the acquisitions and the results of the acquired businesses, where appropriate, to provide a more comparable ~~and meaningful~~ analysis.

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For the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2021

With Comparatives for the Three ~~and Nine~~ Months Ended ~~September 30, 2016~~March 31, 2020


	Three Months Ended March 31,				Favorable (Unfavorable)		Favorable (Unfavorable)
(in millions)	2021		2020		Variance		Percentage
Net sales	$	1,614	$	1,543	$	71	5	%
Cost of sales		1,263		1,220		(43)	(4)	%
Gross profit		351		323		28	9	%

Operating expenses		153		154		1	1	%
Other (income) expense, net		(2)		2		4	200	%
Restructuring/impairment charges		370		14		(356)	(2,543)	%

Operating (loss) income		(170)		153		(323)	(211)	%

Financing costs, net		19		18		(1)	(6)	%
Other, non-operating (income), net		(1)		(1)		—	—	%

(Loss) income before income taxes		(188)		136		(324)	(238)	%
Provision for income taxes		55		58		3	5	%
Net (loss) income		(243)		78		(321)	(412)	%
Less: Net income attributable to non-controlling interests		3		3		—	—	%
Net (loss) income attributable to Ingredion	$	(246)	$	75	$	(321)	(428)	%

Net ~~Income~~income attributable to Ingredion. Net income attributable to Ingredion~~. Net income~~ for the ~~third quarter of 2017 increased~~three months ended March 31, 2021, decreased by 16428 percent to ~~$166~~$(246) million ~~or $2.26 per diluted common share,~~ from ~~$143~~$75 million ~~or $1.93 per diluted common share, a year ago. Net income~~ for the ~~nine~~three months ended ~~September 30, 2017 increased by 7 percent~~March 31, 2020. The decrease in net income was largely attributable to ~~$420 million, or $5.72 per diluted common share, from $391 million, or $5.29 per diluted common share, in the nine months ended September 30, 2016.~~

~~Results~~an impairment charge taken for the ~~third quarter~~held for sale treatment of ~~2017 include a tax benefit~~certain net assets that will be contributed to the Arcor joint venture in Argentina as described in Note 5 of ~~$10 million ($0.14 per diluted common share) due~~the Notes to ~~a deductible foreign exchange loss resulting from~~ the ~~tax settlement between the U.S. and Canada,~~Consolidated Financial Statements included in this report. The effect of this charge was partially offset by after-tax costs of $5 million ($0.07 per diluted common share) of net restructuring costs primarily associated with the Finance Transformation initiative, and $1 million ($0.01 per diluted common share) associated with the integration of acquired operations. Results for the third quarter of 2016 include after-tax costs of $2 million ($0.02 per diluted common share) consisting of employee-related severance and other costs associated with the execution of global information technology (“IT”) outsourcing contracts.

Results for the nine months ended September 30, 2017 include after-tax costs of $21 million ($0.29 per diluted common share) of net restructuring costs primarily associated with our restructuring effort in Argentina and employee-related severance and other costs associated with the Finance Transformation initiative, $6 million ($0.08 per diluted common share) related to the flow-through of costs primarily associated with the sale of TIC Gums inventory that was adjusted to fair value at the acquisition date in accordance with business combination accounting rules, and $2 million ($0.03 per diluted common share) associated with the integration of acquired operations, partially offset by a tax benefit of $10 million ($0.14 per diluted common share) due to a deductible foreign exchange loss resulting from the tax settlement between the U.S. and Canada. Results for the nine months ended September 30, 2016 include after-tax costs of $12 million ($0.16 per diluted common share) consisting of employee-related severance and other costs associated with the execution of IT outsourcing contracts, employee-related severance costs associated with our optimization initiativefavorable price mix in South America and net corn costs ~~attributable to the 2015 sale of the Port Colborne plant. Additionally, our results for the nine months ended September 30, 2016 include $1~~in North America.

Net sales. Net sales increased $71 million ~~($0.01 per diluted common share) associated with the integration of acquired operations.~~

~~Without the acquisition and integration, restructuring, inventory markup, and tax settlement, net income~~or 5 percent for the three ~~and nine~~ months ended September 30, 2017 would have grown 12 percent and 9 percent, respectively, from the comparable prior periods, while diluted earnings per share would have grown 13 percent and 10 percent, respectively, from the comparable prior periods. These increases forMarch 31, 2021 as compared to the three ~~and nine~~ months ended September 30, 2017 primarily reflect continued strong operating results in our North America segment during the year, partially offset by lower earnings in our South America segment due to continued difficult macroeconomic conditions and increased costs in Argentina. The increase for the nine months ended September 30, 2017 was partially offset by higher net financing costs.

~~Net Sales~~. Net sales for the third quarter of 2017 were flat from $1.49 billion a year ago. Volume growth of 2 percent, which was comprised of 2 percent growth from recent acquisitions, was offset by a 2 percent decrease in price/product mix driven by lower raw material costs. Net sales for the nine months ended September 30, 2017 increased 2 percent to $4.40 billion from $4.30 billion for the nine months ended September 30, 2016.March 31, 2020. The increase was driven by price mix, including the pass through of higher corn costs, the inclusion or PureCircle results, and specialty volume growth in Asia-Pacific.

Cost of sales. Cost of sales for the three months ended March 31, 2021 increased by $43 million or 4 percent as compared to the three months ended March 31, 2020. Our gross profit margin increased by 1 percent, from 21 percent for the three months ended March 31, 2020 to 22 percent for the three months ended March 31, 2021. The increase in gross profit margin was mainly attributable to favorable price and product mix.

Operating expenses. Our operating expenses decreased 1 percent to $153 million for the three months ended March 31, 2021 as compared to $154 million for the three months ended March 31, 2020. Operating expenses, as a percentage of net sales, were 10 percent for the three months ended March 31, 2021 and the three months ended March 31, 2020.

Financing costs, net. Financing costs for the three months ended March 31, 2021 increased to $19 million from $18 million for the three months ended March 31, 2020. The increase was driven primarily by lower capitalized interest on capital projects for the three months ended March 31, 2021.

Provision for income taxes. Our effective tax rate for the three months ended March 31, 2021 was (29.3) percent compared to 42.6 percent for the three months ended March 31, 2020. The change in the effective tax rate was driven by the $360 million impairment related to the held for sale treatment of net assets that will be contributed to the Arcor joint venture in Argentina. There was no corresponding income tax benefit recorded with respect to the impairment. Without the impairment recorded the effective tax rate for the three months ended March 31, 2021 would have been 32.0 percent. The decrease in the effective income tax rate compared to the three months ended March 31, 2020, was driven by the

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relatively lower decrease in value of the Mexican peso against the U.S. dollar and a reduction in the Company’s U.S. global intangible low-taxed income (“GILTI”) recorded in accordance with the applicable final U.S. Treasury regulations. During the three months ended March 31, 2020, the Mexican peso decreased in value against the U.S. dollar by 24 percent, compared to 3 percent during the three months ended March 31, 2021. Because the Company uses the U.S. dollar as the functional currency for its subsidiaries in Mexico, its effective income tax rate is strongly influenced by the remeasurement of the Mexican peso financial statements into U.S. dollars. In addition, the decrease in value of the Mexican peso produced substantial taxable translation gains on net-U.S.-dollar-monetary assets held in Mexico, for which there was ~~comprised~~no corresponding gain in pre-tax income. These items were partially offset by a change in the mix of earnings and inclusion of the consolidation of PureCircle and Verdient from their respective dates, as described in Note 3 of the Notes to the Condensed Consolidated Financial Statements included in this report.

Segment Results

North America


	Three Months Ended March 31,				Favorable (Unfavorable)		Favorable (Unfavorable)
(in millions)	2021		2020		Variance		Percentage
Net sales to unaffiliated customers	$	945	$	963	$	(18)	(2)	%
Operating income		134		125		9	7	%

Net sales. Our decrease in net sales of 2 percent ~~growth from recent acquisitions~~for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020, was driven by a 6 percent reduction in volume, which was partially offset by a 3 percent increase in price mix and 1 percent increase in ~~organic volume growth, and favorable currency translation of 1 percent reflecting a stronger Brazilian real, partially offset~~foreign exchange.

Operating income. Our operating income increased by ~~a 2 percent decrease in price/product mix.~~

~~North America’s net sales~~$9 million for the ~~third quarter of 2017 were relatively flat at $903 million from $899 million a year ago.~~Volume growth of 1 percent, which was comprised of 4 percent growth from the TIC Gums acquisition and a 3 percent decline in organic volume due largely to customer shifts in the brewing industry in Mexico and supply chain interruptions caused by natural disasters that affected both our customers and us. This was offset by a 1 percent decrease in price/product mix driven by lower raw material costs. North America’s net sales for the ninethree months ended ~~September 30, 2017 increased 2 percent~~March 31, 2021, as compared to ~~$2.69 billion from $2.63 billion for~~ the ~~nine~~three months ended ~~September 30, 2016.This~~March 31, 2020. The increase was driven by ~~volume growth of 3~~lower net corn costs and favorable price mix.

South America


	Three Months Ended March 31,				Favorable (Unfavorable)		Favorable (Unfavorable)
(in millions)	2021		2020		Variance		Percentage
Net sales to unaffiliated customers	$	273	$	237	$	36	15	%
Operating income		40		26		14	54	%

Net sales. Our net sales increased 15 percent for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020, primarily ~~from the TIC Gums acquisition,~~due to an 20 percent increase in favorable price mix and 4 percent increase in volumes, partially offset by ~~a 1 percent decrease~~unfavorable foreign exchange impact of 9 percent.

Operating income. Our increase in ~~price/product mix driven by lower raw material costs.~~

~~South America’s net sales for third quarter~~operating income of 2017 decreased 7 percent to $257 million from $276 million a year ago. This decrease was primarily driven by an 8 percent decrease in price/product mix due to lower raw material costs in Brazil and unfavorable currency translation of 2 percent reflecting a weaker Argentine peso in the quarter, partially offset by a volume increase of 3 percent. South America’s net sales for the nine months ended September 30, 2017 increased 1 percent to $740 million from $731$14 million for the ~~nine~~three months ended ~~September 30, 2016. This~~March 31, 2021, as compared to the three months ended March 31, 2020, was primarily due to strong price mix and favorable net corn costs.

Asia-Pacific


	Three Months Ended March 31,				Favorable (Unfavorable)		Favorable (Unfavorable)
(in millions)	2021		2020		Variance		Percentage
Net sales to unaffiliated customers	$	235	$	189	$	46	24	%
Operating income		25		20		5	25	%

Net sales. Our net sales increased 24 percent for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020. 12 percent of the increase was due to the inclusion of PureCircle results in the 2021 period. In addition, there was a 6 percent increase in volumes and foreign exchange was 6 percent favorable.

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Operating income. Our operating income increased by $5 million for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020. The increase was driven by the recovery of South Korea and China from prior year pandemic impacts.

EMEA


	Three Months Ended March 31,				Favorable (Unfavorable)		Favorable (Unfavorable)
(in millions)	2021		2020		Variance		Percentage
Net sales to unaffiliated customers	$	161	$	154	$	7	5	%
Operating income		31		27		4	15	%

Net sales. Our net sales increased by 5 percent for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020, primarily driven by favorable ~~currency translation~~foreign exchange of 5 percent ~~primarily reflecting a stronger Brazilian real,~~and favorable price mix of 3 percent. These items were partially offset by a 3 percent decrease in ~~price/product~~volume.

Operating income. Our operating income increased $4 million for the three months ended March 31, 2021, as compared to the March 31, 2020. The increase was largely attributable to favorable price mix ~~due to~~and lower raw material costs in ~~Brazil and a volume decrease of 1 percent, primarily due to difficult macroeconomic conditions and the interruption of manufacturing activities in Argentina.~~ Pakistan.

Asia Pacific’s net sales for the third quarter of 2017 increased 2 percent to $189 million from $185 million a year ago. This increase was driven by volume growth of 8 percent, which was comprised of 7 percent organic volume growth and 1 percent growth from our recent acquisitions in the region, partially offset by a 6 percent decrease in price/product mix due to core customer mix diversification and pass through of lower raw material costs. Asia Pacific’s net sales for the nine months ended September 30, 2017 increased 4 percent to $555 million from $534 million for the nine months ended September 30, 2016. This increase was driven by volume growth of 9 percent, which was comprised of 8 percent organic volume growth and 1 percent volume increase from our recent acquisitions in the region, and favorable currency translation of 1 percent primarily reflecting a stronger Korean won. The increase in volume was partially offset by a 6 percent decrease in price/product mix due to core customer mix diversification.

EMEA’s net sales for the third quarter of 2017 increased 5 percent to $136 million from $129 million a year ago. This increase was driven by a 2 percent increase in price/product mix, favorable currency translation of 2 percent primarily reflecting a stronger Euro in the quarter, and a volume increase of 1 percent. EMEA’s net sales for the nine months ended September 30, 2017 increased 1 percent to $411 million from $405 million a year ago. This increase was driven by a 2 percent increase in price/product mix and volume growth of 1 percent, partially offset by unfavorable currency translation of 2 percent, primarily reflecting a weaker British Pound sterling.

~~Cost of Sales and Operating Expenses.~~ Cost of sales for the third quarter of 2017 decreased 2 percent to $1.10 billion from $1.12 billion a year ago. Our gross profit margin was 26 percent for the third quarter of 2017, up from 25 percent last year. The decline in cost of sales and improvement in gross profit margin are primarily driven by overall lower raw material costs and improved operational efficiencies. Operating expenses for the third quarter of 2017 increased to $152 million from $149 million last year. This increase was primarily driven by the incremental operating expenses of

~~acquired operations. Operating expenses, as a percentage of gross profit, were 39 percent for the third quarter of 2017 as compared to 40 percent a year ago.~~

Cost of sales for the nine months ended September 30, 2017 increased 1 percent to $3.28 billion from $3.24 billion a year ago. This increase was primarily driven by an increase of 2 percent in net sales volume. Our gross profit margin was 25 percent for the nine months ended September 30, 2017, flat with 25 percent last year. The gross profit margin remained flat due to higher operating costs as a result of the temporary manufacturing interruption in Argentina offset by overall lower raw material cost and improved operational efficiencies in North America. Operating expenses for the nine months ended September 30, 2017 increased to $458 million from $431 million last year. This increase was primarily driven by the incremental operating expenses of acquired operations. Operating expenses, as a percentage of gross profit, were 41 percent for the third quarter of 2017 as compared to 41 percent a year ago.

~~Operating Income.~~ Third quarter of 2017 operating income increased 5 percent to $233 million from $221 million a year ago. Operating income for the third quarter of 2017 includes pre-tax net restructuring costs of $7 million consisting of $4 million of other restructuring costs associated with a Finance Transformation initiative and $3 million of other pre-tax restructuring costs including employee-related severance costs in North America. Additionally, the third quarter results include $1 million of costs associated with the integration of acquired operations. Operating income for third quarter of 2016 includes pre-tax costs of $2 million consisting of employee-related severance and other costs associated with the execution of IT outsourcing contracts. Without the restructuring and acquisition-related charges, our ~~third~~ ~~quarter of 2017 operating income would have grown 8 percent from the~~ ~~third~~ quarter of 2016. The increase primarily reflects operating income growth in North America. Currency translation had a net favorable impact of $2 million, reflecting the movements of the Canadian dollar, Brazilian real, and Argentine peso during the quarter.

Operating income for the nine months ended September 30, 2017 increased 3 percent to $639 million from $619 million for the nine months ended September 30, 2016. Operating income for the nine months ended September 30, 2017 includes pre-tax net restructuring costs of $23 million consisting of $17 million of employee-related severance and other costs associated with our restructuring effort in Argentina, $5 million of other restructuring costs associated with a Finance Transformation initiative, and $1 million of other pre-tax restructuring charges that including employee-related severance costs in North America and a refinement of estimates for prior year restructuring activities. Additionally, the nine months ended September 30, 2017 results include $9 million of costs primarily associated with the TIC Gums inventory that was adjusted to fair value at the acquisition date, and $3 million of costs associated with the integration of acquired operations. Operating income for the nine months ended September 30, 2016 includes pre-tax costs of $15 million consisting of employee-related severance and other costs associated with the execution of IT outsourcing contracts and $2 million of costs associated with the integration of acquired operations. Without the restructuring and acquisition-related charges, our operating income for the nine months ended September 30, 2017 would have grown 6 percent from the prior year period. The increase primarily reflects operating income growth in North America, partially offset by an operating income decrease in South America. Currency translation had a net favorable impact of $8 million, reflecting the movements of the Brazilian real, Argentine peso, and Canadian dollar.

North America’s third quarter of 2017 operating income increased 9 percent to $179 million from $164 million a year ago. This increase was primarily driven by net margin improvement from favorable raw material costs and operational efficiencies, partially offset by a decrease in price/product mix. North America’s operating income for the nine months ended September 30, 2017 increased 10 percent to $520 million from $474 million for the nine months ended September 30, 2016. This increase was primarily driven by net margin improvement from favorable raw material costs and operational efficiencies, in addition to organic and acquisition-related volume growth compared to the prior period, and partially offset by a decrease in price/product mix.

South America’s third quarter 2017 operating income decreased 4 percent to $26 million from $27 million a year ago. This decrease was primarily driven by a decrease in price/product mix and partially offset by a margin improvement due to favorable raw material costs. South America’s operating income for the nine months ended September 30, 2017 decreased 25 percent to $44 million from $59 million for the nine months ended September 30, 2016. This decrease was primarily driven by difficult macroeconomic conditions in the region, interruption of manufacturing activities resulting in temporary higher operating costs in Argentina during the second quarter, and unfavorable price/product mix. This decrease was partially offset by a net margin improvement from favorable raw material costs and an $8 million favorable currency translation impact reflecting the movements of the Brazilian real and Argentine peso.

Asia Pacific’s third quarter 2017 operating income was flat from $29 million a year ago. Volume growth and improved operational efficiencies were offset by a decrease in price/product mix due to core customer mix diversification. Asia Pacific’s operating income for the nine months ended September 30, 2017 increased 1 percent to $88 million from $87 million for the nine months ended September 30, 2016. This increase was driven by volume growth, improved operational efficiencies, and a net margin improvement due to favorable raw material costs, offset by a decrease in price/product mix due to core customer mix diversification.

EMEA’s third quarter 2017 operating income increased 4 percent to $26 million from $25 million a year ago. This increase was primarily driven by favorable price/product mix and volume growth during the period, partially offset by increased operating costs. EMEA’s operating income for the nine months ended September 30, 2017 increased 4 percent to $83 million from $80 million for the nine months ended September 30, 2016. This increase was primarily driven by favorable price/product mix and volume growth, partially offset by increased operational costs and a net margin decrease due to unfavorable raw material costs.

~~Financing Costs, net~~. Financing costs for the third quarter of 2017 increased to $16 million from $15 million in the prior-year period. This increase was primarily driven by higher weighted average short-term borrowing costs and an increase in short-term borrowings.

Financing costs for the nine months ended September 30, 2017 increased to $57 million from $48 million for the nine months ended September 30, 2016. This increase was due to higher weighted average short-term borrowing costs and an increase in short-term borrowings. Additionally, an increase in foreign currency transaction losses contributed to the increase.

~~Provision for Income Taxes~~. Our effective income tax rate for the third quarter of 2017 decreased to 22.1 percent from 29.2 percent a year ago. The effective income tax rate for the nine months ended September 30, 2017 was 26.3 percent compared to 30.1 percent a year ago.

We use the U.S. dollar as the functional currency for our subsidiaries in Mexico. For the three and nine months ended September 30, 2017, the effective tax rates were reduced by 1.0 percent and 1.7 percent, respectively, due to the revaluation of the Mexican peso versus the U.S. dollar.

In addition, we increased the valuation allowance on the net deferred tax assets of a foreign subsidiary. As a result, for the three and nine months ended September 30, 2017, the effective tax rates were increased by 2.0 percent and 1.8 percent, respectively.

We had been pursuing relief from double taxation under the U.S.-Canada tax treaty for the years 2004-2013. During the fourth quarter of 2016, a tentative settlement was reached between the U.S. and Canada and, consequently, last year we established a net reserve of $24 million, including interest thereon, recorded as a $70 million liability and a $46 million benefit. In the third quarter of 2017, the two countries finalized the agreement, which eliminated the double taxation, and we paid $63 million to the IRS to settle the liability. As a result of that agreement, we are entitled to deduct a foreign exchange loss of $10 million on our 2017 U.S. federal income tax return. For the three and nine months ended September 30, 2017, the effective tax rates were reduced by 4.9 percent and 1.8 percent, respectively, due to the foreign exchange loss deduction. The foreign exchange loss was not recognized in income before taxes because it arose from the terms of the agreement.

The above discrete tax items were partially offset by individually insignificant discrete items. Without these items, the rate for the three and nine months ended September 30, 2017 would have been approximately 27.3 percent and 28.1 percent, respectively.

Our effective income tax rates for the three and nine months ended September 30, 2016 were increased by 2.3 percent and 2.5 percent, respectively, due to the devaluation of the Mexican peso versus the U.S. dollar. The impact of the Mexican peso was partially offset by individually insignificant factors. Without these items, the rates for the three and nine months ended September 30, 2016 would have been approximately 27.4 percent and 28.3 percent, respectively.

~~Comprehensive Income Attributable to Ingredion~~. Comprehensive income for the third quarter of 2017 increased to $186 million from $138 million a year ago. The increase reflects an increase in net income, favorable variances due to losses resulting from cash-flow hedging activities, and favorable currency translation adjustments.

Comprehensive income for the nine months ended September 30, 2017 increased to $482 million from $459 million for the nine months ended September 30, 2016. This increase reflects an increase in net income, favorable variances due to losses resulting from cash-flow hedging activities, partially offset by unfavorable currency translation adjustments.

Liquidity and Capital Resources

Cash provided by operating activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 was ~~$524~~$22 million, as compared to ~~$542~~$65 million ~~a year ago.~~for the three months ended March 31, 2020. The decrease in operating cash flow was primarily ~~reflects the~~driven by our changes in ~~our~~ working ~~capital, partially offset by an increase in our net income.~~

~~Capital expenditures of $222~~capital. Cash used for investing activities for the three months ended March 31, 2021 was $64 million, as compared to $96 million for the ~~nine~~three months ended ~~September 30, 2017 are in line with our~~March 31, 2020. The change was driven by the timing of capital ~~spending plan~~expenditures and mechanical stores purchases, which totaled $63 million for the ~~year. We anticipate that our capital expenditures will be approximately $300 million~~three months ended March 31, 2021, compared to ~~$325~~$98 million for ~~2017.~~ the three months ended March 31, 2020.

As of March 31, 2021, our total debt consists of the following:


(in millions)
2.900% senior notes due June 1, 2030	$	594
3.200% senior notes due October 1, 2026		497
3.900% senior notes due June 1, 2050		390
6.625% senior notes due April 15, 2037		253
Revolving credit facility		—
Other long-term borrowings		15
Total long-term debt		1,749
Amended term loan credit agreement due March 15, 2022		380
Other short-term borrowings		68
Total short-term borrowings		448
Total debt	$	2,197

During the first quarter ~~of 2017,~~ended March 31, 2021, we ~~repurchased approximately 1 million shares of~~amended and restated our ~~common stock in open market transactions for $123 million.~~

~~On August 18, 2017, the Company entered into a new~~term loan credit agreement (the “Amended Term Loan Credit Agreement”). The Amended Term Loan Credit Agreement ~~(“Term Loan”) to establish a senior unsecured term loan credit facility. Under~~restates the ~~Term Loan,~~previous agreement by extending the ~~Company is allowed three borrowings in an amount of up to $500 million total. The Term Loan matures 18 months from the~~maturity date of the ~~final borrowing. As of September 30, 2017, the Company had initiated two~~ borrowings under the ~~Term Loan totaling $380 million. The proceeds were used to refinance $300 million of 1.8 percent senior notes due September 25, 2017 and pay down~~previous agreement until March 15, 2022. No new borrowings ~~outstanding on the revolving credit facility. On October 25, 2017, the Company initiated its third and final borrowing~~ under the ~~Term Loan of $40 million, bringing the total outstanding Term Loan to $420 million, due April 25, 2019. See also Note 11 of the Condensed Consolidated Financial Statements.~~

~~As of September 30, 2017, there were borrowings of $380 million outstanding under the~~Amended Term Loan Credit Agreement were incurred in connection with the amendment and ~~no borrowings outstanding~~restatement. Borrowings under the ~~Revolving~~Amended Term Loan Credit ~~Facility. In~~Agreement bear interest at a variable annual rate based on London Interbank Offering Rate (“LIBOR”) or a base rate, at our election, subject to the terms and conditions thereof, plus, in each case, an applicable margin. The Amended Term Loan Credit Agreement reduces the applicable interest rate margin for loans accruing interest based on LIBOR from 0.80 percent to 0.75 percent. The Company is required to pay a fee on the unused availability under the Amended Term Loan Credit Agreement. The Amended Term Loan Credit Agreement contains customary representations, warranties, covenants and events of default, including covenants restricting the incurrence of liens, the incurrence of indebtedness by our subsidiaries and certain fundamental changes involving us and our subsidiaries, subject to certain exceptions in each case. We must also maintain a specified maximum consolidated leverage ratio and a specified minimum consolidated interest coverage ratio. As of March 31, 2021, we were in compliance

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with these financial covenants. The occurrence of an event of default under the Amended Term Loan Credit Agreement could result in all loans and other obligations being declared due and payable and the term loan credit facility being terminated.

As of March 31, 2021, in addition to ~~the~~approximately $1.0 billion of borrowing availability under ~~the Revolving Credit Agreement,~~our revolving credit facility, we have approximately ~~$493~~$736 million of unused operating lines of credit in the various foreign countries in which we operate.

~~As of September 30, 2017, we had total debt outstanding of $1,884 million, compared to $1,956 million at December 31, 2016. As of September 30, 2017 our total debt consists of the following:~~

As of

(in millions)

September 30, 2017

3.2% senior notes due October 1, 2026

$
496

4.625% senior notes due November 1, 2020

398

6.625% senior notes due April 15, 2037

254

5.62% senior notes due March 25, 2020

200

Term loan credit agreement due April 25, 2019

380

Revolving credit facility

—

Fair value adjustment related to hedged fixed rate debt instruments

3

Long-term debt

$
1,731

Short-term borrowings

153

Total debt

$
1,884

The weighted average interest rate on our total indebtedness was approximately ~~4.1~~3.4 percent for the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2021, compared to 3.9 percent infor the ~~comparable prior-year period.~~three months ended March 31, 2020.

On ~~September 15, 2017,~~March 16, 2021, our Board of Directors declared a quarterly cash dividend of ~~$0.60~~$0.64 per share of common stock. This dividend was paid on ~~October 25, 2017~~April 26, 2021, to stockholders of record at the close of business on ~~October 2, 2017.~~April 1, 2021. Additionally, during the first quarter of 2021, we repurchased 158 thousand outstanding shares of common stock in open market transactions at a net cost of $14 million.

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 financing activities for the foreseeable future.

We have not provided foreign withholding taxes, state income taxes, and federal and state ~~income~~ taxes or foreign currency gains/losses 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 U.S. to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements. Approximately ~~$484~~$444 million of the total ~~$505~~$577 million of cash and cash equivalents and short-term investments at ~~September 30, 2017~~March 31, 2021 was held by our operations outside of the U.S.

We expect that available cash balances and borrowings expected to be available under the revolving credit ~~facilities in the U.S., along~~facility, together with cash generated from operations and our access to debt markets, will be sufficient to meet our operating and other cash needs for at least the ~~foreseeable future.~~next twelve months.

Hedging and Financial Risk

~~Hedging~~

Hedging:We are exposed to market risk stemming from changes in commodity prices (primarily corn and natural gas), ~~foreign currency~~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-related futures, options and swap contracts, forward currency-related contracts and options, interest rate swap agreements, and Treasury lock agreements (“T-Locks”). See Note 6 of the Notes to the Condensed Consolidated Financial Statements included in this report 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 our 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 12 to 24 months, in order to hedge price risk associated with fluctuations in market prices. We also enter into futures contracts to hedge price risk associated with fluctuations in the market price of ethanol. 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 corn oil) in order to mitigate the price risk of corn oil sales. Unrealized gains and losses associated with marking our commodities-based cash flow hedge derivative instruments to market are recorded as a component of other comprehensive ~~income (“OCI”~~loss (��OCL”). ~~At September 30, 2017,~~As of March 31, 2021, our ~~accumulated~~Accumulated other comprehensive loss account (“~~AOCI”~~AOCL”) included $5$67 million of ~~losses,~~ net gains (net of income ~~taxes~~tax expense of ~~$4 million,~~$24 million) related to these derivative instruments. It is anticipated that ~~these losses~~$67 million of net gains (net of income tax expense of $24 million) will be reclassified into earnings during the next 12 months. We expect the ~~losses~~net gains to be offset by changes in the underlying commodities costs.

~~Foreign Currency~~30

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Foreign-Currency Exchange Risk: Due to our global operations, including operations in many emerging markets, we are exposed to fluctuations in ~~foreign currency~~foreign-currency exchange rates. As a result, we have exposure to translational ~~foreign exchange~~foreign-exchange risk when our foreign operations’ results are translated to U.S. dollars and to transactional ~~foreign exchange~~foreign-exchange risk when transactions not denominated in the functional currency of the operating unit are ~~revalued.~~revalued into U.S. dollars. We primarily use derivative financial instruments such as ~~foreign currency~~foreign-currency forward contracts, swaps and options to manage our foreign currency transactional exchange risk. ~~At September 30, 2017,~~We enter into foreign-currency derivative instruments that are designated as both cash flow hedging instruments as well as instruments not designated as hedging instruments as defined by Accounting Standards Codification 815, Derivatives and Hedging. As of March 31, 2021, we had foreign currency ~~forward sales contracts that are~~derivatives not designated as ~~fair value hedges~~hedging instruments hedging certain asset and liability positions with an aggregate notional ~~amount~~amounts of ~~$447~~$487 million and $276 million, respectively.

As of March 31, 2021, we had foreign currency ~~forward purchase contracts~~derivatives designated as cash flow hedging instruments hedging certain asset and liability positions with an aggregate notional amounts of $256 million and $422 million, respectively. The amount ~~of $173 million that hedged transactional exposures.~~

~~We also have foreign currency derivative instruments that hedge certain foreign currency transactional exposures and are designated as cash-flow hedges. At September 30, 2017,~~included in AOCI ~~included~~relating to these hedges at March 31, 2021, was an insignificant amount of net losses ~~net~~(net of income ~~taxes, relating to these hedges.~~tax benefit of $1 million). It is anticipated that $2 million of net losses (net of income tax benefit of $1 million) will be reclassified into earnings during the next 12 months.

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 U.S. dollars at rates less favorable than the official rate, although the difference in rates has decreased from past levels.

Interest Rate Risk: We occasionally use interest rate swaps and 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~~outstanding T-Locks ~~outstanding~~ as of ~~September 30, 2017.~~ March 31, 2021.

As of ~~September 30, 2017, AOCI~~March 31, 2021, AOCL included $3$4 million of net losses (net of an income ~~taxes~~tax benefit of $2$1 million) related to previously settled T-Locks. ~~These~~Once T-Locks are settled, deferred losses are ~~being~~ amortized to financing costs over the terms of the senior notes with which

they are associated. It is anticipated that $1 million of ~~these~~net losses (net of ~~income taxes~~an insignificant amount of ~~$1 million)~~taxes) will be reclassified into earnings during the next 12 months.

As of ~~September 30, 2017,~~March 31, 2021, we did not have any interest rate swap ~~agreements~~agreements. As of March 31, 2020, we had an interest rate swap that effectively ~~convert~~converted the interest rates on $200 million of our $400 million of ~~4.625 percent~~4.625% senior notes due November 1, 2020, to variable ~~rates. These~~rates, which was paid in July 2020. This swap ~~agreements call~~agreement called 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 U.S. dollar LIBOR ~~rate~~ plus a spread. ~~We have~~As of March 31, 2020, we designated ~~these~~this interest rate swap ~~agreements~~agreement as ~~hedges~~a hedge of the changes in fair value of the underlying debt ~~obligations~~obligation attributable to changes in interest rates and ~~account~~accounted for ~~them~~it as ~~fair-value hedges.~~a fair value hedge. The fair value of ~~these~~the interest rate swap ~~agreements~~agreement as of March 31, 2020 was $3a $4 million ~~at September 30, 2017~~gain, and iswas reflected in the Condensed Consolidated Balance Sheets within ~~other~~Other assets, with an offsetting amount recorded in ~~long-term~~Long-term debt to adjust the carrying amount of the hedged debt obligations.

Critical Accounting Policies and Estimates

Our critical accounting policies and estimates are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations ~~included~~ in our ~~2016~~ Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2020. There have been no other changes to our critical accounting policies and estimates during the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2021.

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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,~~others, any statements regarding the Company’s future prospects or ~~future~~ financial condition, earnings, revenues, tax rates, capital expenditures, cash flows, 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~~forward-looking words such as “may,” “will,” “should,” “anticipate,” ~~“assume”,~~“assume,” “believe,” “plan,” “project,” “estimate,” “expect,” “intend,” “continue,” “pro forma,” “forecast,” “outlook,” “propels,” “opportunities,” ~~“potential”~~“potential,” “provisional,” 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 ininto 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~~investors 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 impact of COVID-19 on the demand for our products and our financial results; changing consumption preferences relating to high fructose corn syrup and other products we make; 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; volatility and turmoil in the capital markets; the commercial and consumer credit environment; general political, economic, business, and market conditions that affect customers and ~~weather conditions~~consumers in the various geographic regions and countries in which we buy our raw materials or manufacture or sell our ~~products;~~products, including, particularly, economic, currency, and political conditions in South America and economic and political conditions in Europe, and the impact these factors may have on our sales volumes, the pricing of our products and our ability to collect our receivables from customers; future financial performance of major industries which we serve and from which we derive a significant portion of our sales, including, without limitation, the food, ~~and~~ beverage, ~~paper, corrugated~~animal nutrition, and brewing industries; ~~energy costs~~the uncertainty of acceptance of products developed through genetic modification and ~~availability, freight~~biotechnology; our ability to develop or acquire new products and ~~shipping costs,~~services at rates or of qualities sufficient to gain market acceptance; increased competitive and/or customer pressure in the corn-refining industry and ~~changes in regulatory controls regarding quotas, tariffs, duties, taxes~~related industries, including with respect to the markets and ~~income tax rates,~~prices for our primary products and our co-products, particularly ~~United States tax reform; operating difficulties;~~corn oil; the availability of raw materials, including potato starch, tapioca, gum ~~arabic,~~Arabic, and the specific varieties of corn upon which some of our products are ~~based;~~based, and our ability to ~~develop new products~~pass along potential increases in the cost of corn or other raw materials to customers; energy costs and ~~services at a rate or of a quality sufficient to meet expectations;~~availability, including energy issues in Pakistan; ~~boiler reliability;~~ our ability to ~~effectively~~

~~integrate and operate acquired businesses; our ability to~~contain costs, achieve budgets, and to realize expected ~~synergies;~~synergies, including with respect to our ability to complete planned maintenance and investment projects ~~successfully~~on time and on ~~budget;~~budget and realize expected savings under our Cost Smart program as well as with respect to freight and shipping costs; the behavior of financial and capital markets, including with respect to foreign currency fluctuations, fluctuations in interest and exchange rates and market volatility and the associated risks of hedging against such fluctuations; our ability to successfully identify and complete acquisitions or strategic alliances on favorable terms as well as our ability to successfully integrate acquired businesses or implement and maintain strategic alliances and achieve anticipated synergies with respect to all of the foregoing; operating difficulties at our manufacturing facilities; the impact of impairment charges on our goodwill or long-lived assets; changes in our tax rates or exposure to additional income tax liability; our ability to maintain satisfactory labor ~~disputes; genetic and biotechnology issues; changing consumption preferences including those relating to high fructose corn syrup; increased competitive and/~~relations; the impact on our business of natural disasters, war, or ~~customer pressure in the corn-refining industry; and~~similar acts of hostility, threats or acts of terrorism, the outbreak or continuation of ~~serious communicable disease~~pandemics such as COVID-19, or ~~hostilities~~the occurrence of other significant events beyond our control; changes in government policy, law, or regulation and costs of legal compliance, including ~~acts~~compliance with environmental regulation; potential effects of ~~terrorism. Factors relating~~climate change; security breaches with respect to information technology systems, processes, and sites; our ability to raise funds at reasonable rates and other factors affecting our access to sufficient funds for future growth and expansion; volatility in the ~~acquisition of TIC Gums~~stock market and other factors that could ~~cause actual results~~adversely affect our stock price; risks affecting the continuation of our dividend policy; and ~~developments~~our ability to ~~differ from expectations include: the anticipated benefits~~remediate in a timely manner a material weakness in our internal control over financial reporting.

Table of the acquisition, including synergies, may not be realized; and the integration of TIC Gum’s operations with those of Ingredion may be materially delayed or may be more costly or difficult than expected. Contents

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” and other information included in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2020 and in our subsequent reports on Forms 10-Q and 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 5055 to 5156 in our Annual Report on Form 10-K for the year ended December 31, ~~2016,~~2020 for a discussion ~~as to how~~of the manner in which we address risks with respect to interest rates, raw material and energy costs and foreign currencies. There have been no material changes in the information ~~that would be~~ provided with respect to those disclosures ~~from December 31, 2016 to September 30, 2017.~~during the first quarter of 2021. For additional information, also see “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Hedging and Financial Risk” in this report.

ITEM 4

CONTROLS AND PROCEDURES

Evaluation of Disclosure 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, 2017.~~March 31, 2021. Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that as a result of the material weakness in our internal control over financial reporting described below, Ingredion’s disclosure controls and procedures ~~(a)~~were not effective as of March 31, 2021.

Changes in Internal Control Over Financial Reporting

During the three months ended March 31, 2021, our management continued updating certain internal controls and supporting processes to address the material weakness in our internal control over financial reporting described in our Annual Report on Form 10-K for the year ended December 31, 2020 related to ineffective information technology general controls (“ITGCs”) related to user access over certain information technology (“IT”) systems. These control deficiencies were the result of insufficient development of IT personnel as the control owners did not adequately understand the control objectives or the design of the control activity, as well as the result of ineffective timely communication of the control objective to these IT personnel by management. To date, management has provided enhanced control training for ITGC owners, and we have designed and are ~~effective~~ in ~~providing reasonable assurance~~process of implementing our improved documentation of the user access review that ~~all information required to~~more clearly communicates the control objective and management’s documentation requirements. We expect remediation of this material weakness will be ~~disclosed~~completed by the end of the third quarter of 2021.

We acquired PureCircle and Verdient in the ~~reports that we file or submit under the Securities Exchange Act~~third and fourth quarters of ~~1934, as amended, has been recorded, processed, summarized~~2020, respectively, and reported within the time periods specified in the Securities and Exchange Commission’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.

In the fourth quarter of 2016, we acquired Shandong Huanong Specialty Corn Development Co., Ltd. in Pingyuan County, Shandong Province, China (“Shandong Huanong”) and TIC Gums Incorporated (“TIC Gums”). In the first quarter of 2017, we acquired Sun Flour Industry Co., Ltd. (“Sun Flour”) in Thailand. We are currently in the process of evaluating and integrating the acquired operations, processes and internal controls. See Note 3 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information regarding the acquisitions. ~~There have been~~

Other than as described above, there were no ~~other~~ changes into our internal control over financial reporting that occurred during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II OTHER INFORMATION

ITEM 1

LEGAL PROCEEDINGS

~~We are a party to a large number of labor claims~~In 2015 and 2016, the Company self-reported certain monitoring and recordkeeping issues relating to ~~our Brazilian operations. We have reserved an aggregate~~environmental regulatory matters involving its Indianapolis, Indiana manufacturing facility. In September 2017, following inspections and the provision by the Company of ~~approximately $5 million as~~requested information to the U.S. Environmental Protection Agency (the “EPA"), the EPA issued the Company a Notice of ~~September 30, 2017 in respect of these claims.~~Violation, which included additional alleged violations beyond those self-reported by the Company. These ~~labor claims~~additional alleged violations primarily relate to ~~dismissals, severance, health~~the results of stack testing at the facility. The allegations in the Notice of Violation, whether from the self-reported information, the inspections or the additional requested information, are not material to us. The EPA has referred the overall matter to the U.S. Department of Justice, Environment and ~~safety, work schedules~~Natural Resources Division (the "DOJ"). The DOJ and ~~salary adjustments.~~the Company are engaged in discussions with respect to a resolution of this matter.

We are currently subject to ~~various other~~ claims and suits arising in the ordinary course of business, including those relating to labor matters, certain environmental proceedings, and ~~other~~ commercial claims. We also routinely receive inquiries from regulators and other government authorities relating to various aspects of our business, including with respect to compliance with laws and regulations relating to the environment, and at any given time, we have matters at various stages of resolution with the applicable governmental authorities. The outcomes of these matters are not within our complete control and may not be known for prolonged periods of time. We do not believe that the results of currently known legal proceedings and inquires ~~even if unfavorable to us,~~ will be material to us. There can be no assurance, however, that such claims, suits or investigations or those arising in the future, whether taken individually or in the aggregate, will not have a material adverse effect on our financial condition or results of operations.

ITEM 2

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities:


				~~Maximum Number~~
				~~(or Approximate~~
			~~Total Number of~~	~~Dollar Value) of~~
	~~Total~~	~~Average~~	~~Shares Purchased as~~	~~Shares that may yet~~
	~~Number~~	~~Price~~	~~part of Publicly~~	~~be Purchased Under~~
	~~of Shares~~	~~Paid~~	~~Announced Plans or~~	~~the Plans or Programs~~
~~(shares in thousands)~~	~~Purchased~~	~~per Share~~	~~Programs~~	~~at end of period~~
~~July 1 – July 31, 2017~~	—	—	—	~~3,702 shares~~
~~August 1 – August 31, 2017~~	—	—	—	~~3,702 shares~~
~~September 1 – September 30, 2017~~	—	—	—	~~3,702 shares~~
~~Total~~	—	—	—

The following table presents information regarding our repurchase of shares of our common stock during the three months ended March 31, 2021.


				Maximum Number
				(or Approximate
			Total Number of	Dollar Value) of
	Total	Average	Shares Purchased as	Shares That May Yet
	Number	Price	Part of Publicly	be Purchased Under
	of Shares	Paid	Announced Plans or	the Plans or Programs
(shares in thousands)	Purchased	per Share	Programs	at End of Period
January 1 – January 31, 2021	—	—	—	5,855 shares
February 1 – February 28, 2021	—	—	—	5,855 shares
March 1 – March 31, 2021	158,065	89.59	158,065	5,697 shares
Total	158,065	89.59	158,065

On ~~December 12, 2014,~~October 22, 2018, the Board of Directors authorized a stock repurchase program permitting ~~the Company~~us to purchase up to 5an additional 8.0 million shares of ~~its~~our outstanding common ~~shares~~stock from ~~January 1, 2015~~November 5, 2018, through December 31, ~~2019. At September 30, 2017,~~2023. As of March 31, 2021, we have ~~3.7~~5.7 million shares available for repurchase under the stock repurchase program.

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ITEM 6

EXHIBITS

~~EXHIBITS~~

a) Exhibits

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

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

EXHIBIT INDEX


Number		Description of Exhibit
~~Number~~		~~Description of Exhibit~~
~~4.1~~ 10.1		Second Amended and Restated Term Loan Credit Agreement, dated as of ~~August 18, 2017,~~March 16, 2021, among Ingredion Incorporated, as Borrower, the ~~lenders signatory~~Lenders party thereto and Bank of America, N.A., as Administrative Agent ~~and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as Sole Bookrunner and Sole Lead Arranger~~ (incorporated by reference to Exhibit ~~4.1~~10.1 to the Company’s Current Report on Form 8-K dated ~~August~~March 18, ~~2017,~~2021, filed on ~~August 24, 2016)~~March 18, 2021 (File No. 1-13397)).

10.2*†		Form of Performance Share Award Agreement for use in connection with awards under the Stock Incentive Plan.

10.3*†		Form of Restricted Stock Units Award Agreement for use in connection with awards under the Stock Incentive Plan.

31.1†		~~CEO~~Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 ~~Certification Pursuant to~~of the Sarbanes-Oxley Act of 2002.

31.2†		~~CFO~~Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 ~~Certification Pursuant to~~of the Sarbanes-Oxley Act of 2002.

32.1††		~~CEO~~ Certification ~~Pursuant~~of Chief Executive Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code, as ~~created by~~adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2††		~~CFO~~ Certification ~~Pursuant~~of Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) under the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code, as ~~created by~~adopted pursuant to Section 906 of the ~~Sarbanes-Oxley~~Sarbanes Oxley Act of 2002.

~~101~~101.INS†		~~The following financial information from Ingredion Incorporated’s Quarterly Report on Form 10-Q for~~XBRL Instance Document (the instance document does not appear in the ~~quarterly period ended September 30, 2017 formatted~~Interactive Data File because its XBRL tags are embedded within the Inline XBRL document).

101.SCH†		Inline XBRL Taxonomy Extension Schema Document.
101.CAL†		Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF†		Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB†		Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE†		Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104†		Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document, which is contained 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.Exhibit 101).

HIDDEN_ROW

†

Filed with this report.

††

Furnished with this report.

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Management contract or compensatory plan or arrangement to be filed as an exhibit to this form pursuant to Item 6 of this report.

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SIGNATURES

~~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
		~~INGREDION INCORPORATED~~


DATE:	~~November 3, 2017~~May 7, 2021	By	/s/ James D. Gray
		James D. Gray
		Executive Vice President and Chief Financial Officer


~~DATE:~~	~~November 3, 2017~~	By	~~/s/ Stephen K. Latreille~~
		~~Stephen K. Latreille~~
		~~Vice President and Corporate Controller~~

3137

		Page
Part I

Item 1	Financial Statements	3
	Condensed Consolidated Statements of (Loss)Income	3
	Condensed Consolidated Statements of Comprehensive Loss	4
	Condensed Consolidated Balance Sheets	5
	Condensed Consolidated Statements of Equity and Redeemable Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2	Management’s discussion and analysis of financial condition and results of operations	25
Item 3	Quantitative and qualitative disclosures about market risk	33
Item 4	Controls and procedures	33

Part II

Item 1	Legal proceedings	34
Item 2	Unregistered sales of equity securities and use of proceeds	34
Item 6	Exhibits	35
Signatures		37


	September 30,		December 31,
(in millions, except share and per share amounts)	2017		2016
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	491	$	512
Short-term investments		14		4
Accounts receivable, net		901		923
Inventories		825		789
Prepaid expenses		35		24
Total current assets		2,266		2,252
Property, plant and equipment, net of accumulated depreciation of $2,980 and $2,826, respectively		2,186		2,116
Goodwill		803		784
Other intangible assets, net of accumulated amortization of $130 and $106, respectively		499		502
Deferred income tax assets		7		7
Other assets		132		121
Total assets	$	5,893	$	5,782

Liabilities and equity
Current liabilities:
Short-term borrowings	$	153	$	106
Accounts payable and accrued liabilities		787		872
Total current liabilities		940		978

Non-current liabilities		180		158
Long-term debt		1,731		1,850
Deferred income tax liabilities		154		171
Share-based payments subject to redemption		30		30

Ingredion stockholders’ equity:
Preferred stock — authorized 25,000,000 shares — $0.01 par value, none issued		—		—
Common stock — authorized 200,000,000 shares — $0.01 par value, 77,810,875 issued at September 30, 2017 and December 31, 2016, respectively		1		1
Additional paid-in capital		1,140		1,149
Less: Treasury stock (common stock: 5,964,226 and 5,396,526 shares at September 30, 2017 and December 31, 2016, respectively) at cost		(504)		(413)
Accumulated other comprehensive loss		(1,009)		(1,071)
Retained earnings		3,203		2,899
Total Ingredion stockholders’ equity		2,831		2,565
Non-controlling interests		27		30
Total equity		2,858		2,595
Total liabilities and equity	$	5,893	$	5,782


	Total Equity												Share-based
			Additional				Accumulated Other				Non-		Payments
	Common		Paid-In		Treasury		Comprehensive		Retained		Controlling		Subject to
(in millions)	Stock		Capital		Stock		Loss		Earnings		Interests		Redemption
Balance, December 31, 2016	$	1	$	1,149	$	(413)	$	(1,071)	$	2,899	$	30	$	30
Net income attributable to Ingredion										420
Net income attributable to non-controlling interests												9
Dividends declared										(116)		(12)
Repurchases of common stock						(123)
Share-based compensation, net of issuance				(9)		32								—
Other comprehensive income								62
Balance, September 30, 2017	$	1	$	1,140	$	(504)	$	(1,009)	$	3,203	$	27	$	30



		Preliminary
(in millions)		TIC Gums
Working capital (excluding cash)	$	49
Property, plant and equipment		37
Identifiable intangible assets		133
Goodwill		177
Total purchase price, net of cash	$	396



				Estimated
	Fair Value		Valuation Technique	Useful Life
Customer relationships	$	94	Multi-period excess earnings method	20 years
Trade names		35	Relief-from-royalty method	Indefinite
Proprietary technology		4	Relief-from-royalty method	8 years


Balance in severance accrual as of December 31, 2016	$	7
Restructuring charge for employee-related severance costs:
Argentina		15
North America Finance Transformation		3
Other		2
Prior year restructuring activities		(2)
Payments made to terminated employees		(14)
Balance in severance accrual as of September 30, 2017	$	11


	As of		As of
(in millions)	September 30, 2017		December 31, 2016
Total assets
North America	$	3,699	$	3,796
South America		877		809
Asia Pacific		796		697
EMEA		521		480
Total	$	5,893	$	5,782


	Fair Value of Derivative Instruments
		Fair Value					Fair Value
Derivatives designated as		As of		As of			As of		As of
hedging instruments:	Balance Sheet	September 30,		December 31,		Balance Sheet	September 30,		December 31,
(in millions)	Location	2017		2016		Location	2017		2016

Commodity and foreign currency	Accounts receivable, net	$	14	$	31	Accounts payable and accrued liabilities	$	28	$	25

Commodity, foreign currency, and interest rate contracts	Other assets		7		8	Non-current liabilities		7		2

Total		$	21	$	39		$	35	$	27


	Nine Months Ended September 30, 2017					Nine Months Ended September 30, 2016
	Net Income					Net Income
	Available		Weighted	Per Share		Available		Weighted	Per Share
(in millions, except per share amounts)	to Ingredion		Average Shares	Amount		to Ingredion		Average Shares	Amount

Basic EPS	$	420	72.0	$	5.83	$	391	72.2	$	5.42

Effect of Dilutive Securities:
Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards			1.4					1.8

Diluted EPS	$	420	73.4	$	5.72	$	391	74.0	$	5.29


	As of September 30,		As of December 31,
(in millions)	2017		2016
Finished and in process	$	497	$	478
Raw materials		274		260
Manufacturing supplies and other		54		51
Total inventories	$	825	$	789


			Deferred				Unrealized		Accumulated
	Cumulative		Gain (Loss)		Pension and		Gain		Other
	Translation		on Hedging		Postretirement		on		Comprehensive
(in millions)	Adjustment		Activities		Adjustment		Investment		Loss
Balance, December 31, 2016	$	(1,008)	$	(7)	$	(56)	$	—	$	(1,071)
Other comprehensive income (loss) before reclassification adjustments		62		(4)		1		1		60
Amount reclassified from accumulated OCI		—		1		(1)		—		—
Tax benefit		—		2		—		—		2
Net other comprehensive income (loss)		62		(1)		—		1		62
Balance, September 30, 2017	$	(946)	$	(8)	$	(56)	$	1	$	(1,009)