Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Feb. 16, 2018 | Jun. 30, 2017 | |
Document and Entity Information | |||
Entity Registrant Name | Ingredion Inc | ||
Entity Central Index Key | 1,046,257 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 8,486,000,000 | ||
Entity Common Stock, Shares Outstanding | 72,235,558 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed Consolidated Statements of Income | |||
Net sales before shipping and handling costs | $ 6,180 | $ 6,022 | $ 5,958 |
Less: shipping and handling costs | 348 | 318 | 337 |
Net sales | 5,832 | 5,704 | 5,621 |
Cost of sales | 4,359 | 4,302 | 4,379 |
Gross profit | 1,473 | 1,402 | 1,242 |
Operating expenses | 611 | 579 | 555 |
Other income, net | (18) | (4) | (1) |
Restructuring/impairment charges | 38 | 19 | 28 |
Operating income | 842 | 808 | 660 |
Financing costs, net | 73 | 66 | 61 |
Income before income taxes | 769 | 742 | 599 |
Provision for income taxes | 237 | 246 | 187 |
Net income | 532 | 496 | 412 |
Less: Net income attributable to non-controlling interests | 13 | 11 | 10 |
Net income attributable to Ingredion | $ 519 | $ 485 | $ 402 |
Weighted average common shares outstanding: | |||
Basic (in shares) | 72 | 72.3 | 71.6 |
Diluted (in shares) | 73.5 | 74.1 | 73 |
Earnings per common share of Ingredion: | |||
Basic (in dollars per share) | $ 7.21 | $ 6.70 | $ 5.62 |
Diluted (in dollars per share) | $ 7.06 | $ 6.55 | $ 5.51 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | |||
Net income | $ 532 | $ 496 | $ 412 |
Other comprehensive income: | |||
Losses on cash-flow hedges, net of income tax effect of $6, $6, and $19, respectively | (10) | (11) | (42) |
Losses on cash flow hedges reclassified to earnings, net of income tax effect of $2, $16, and $14, respectively | 4 | 33 | 32 |
Actuarial gains (losses) on pension and other postretirement obligations, settlements and plan amendments, net of income tax effect of $2, $4, and $5, respectively | 6 | (10) | 13 |
(Gains) losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect of $1, $-, and $-, respectively | (1) | 1 | 1 |
Unrealized gains on investments, net of income tax effect of $1, $-, and $-, respectively | 2 | 1 | |
Currency translation adjustment | 57 | 7 | (324) |
Comprehensive income | 590 | 517 | 92 |
Less: Comprehensive income attributable to non-controlling interests | 13 | 12 | 10 |
Comprehensive income attributable to Ingredion | $ 577 | $ 505 | $ 82 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed Consolidated Statements of Comprehensive Income (Loss) | |||
Gains / (loss) on cash-flow hedges, net of income tax effect | $ 6 | $ 6 | $ 19 |
Amount of losses on cash-flow hedges reclassified to earnings, net of income tax effect of | (2) | (16) | (14) |
Actuarial gain (loss) on pension and other postretirement obligations, settlements and plan amendments, net of income tax effect | (2) | $ 4 | $ (5) |
(Gains) losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect | 1 | ||
Unrealized gains on investments, net of income tax effect | $ (1) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 595 | $ 512 |
Short-term investments | 9 | 4 |
Accounts receivable, net | 961 | 923 |
Inventories | 823 | 789 |
Prepaid expenses | 27 | 24 |
Total current assets | 2,415 | 2,252 |
Property, plant and equipment | ||
Land | 225 | 183 |
Buildings | 731 | 704 |
Machinery and equipment | 4,252 | 4,055 |
Property, Plant and Equipment, at cost | 5,208 | 4,942 |
Less: accumulated depreciation | (2,991) | (2,826) |
Property, plant and equipment - net | 2,217 | 2,116 |
Goodwill | 803 | 784 |
Other intangible assets, net of accumulated amortization of $139 and $106, respectively | 493 | 502 |
Deferred income tax assets | 9 | 7 |
Other assets | 143 | 121 |
Total assets | 6,080 | 5,782 |
Current liabilities: | ||
Short-term borrowings | 120 | 106 |
Accounts payable | 493 | 440 |
Accrued liabilities | 344 | 432 |
Total current liabilities | 957 | 978 |
Non-current liabilities | 227 | 158 |
Long-term debt | 1,744 | 1,850 |
Deferred income tax liabilities | 199 | 171 |
Share-based payments subject to redemption | 36 | 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 December 31, 2017 and December 31, 2016, respectively | 1 | 1 |
Additional paid-in capital | 1,138 | 1,149 |
Less: Treasury stock (common stock: 5,815,904 and 5,396,526 shares at December 31, 2017 and December 31, 2016, respectively) at cost | (494) | (413) |
Accumulated other comprehensive loss | (1,013) | (1,071) |
Retained earnings | 3,259 | 2,899 |
Total Ingredion stockholders’ equity | 2,891 | 2,565 |
Non-controlling interests | 26 | 30 |
Total equity | 2,917 | 2,595 |
Total liabilities and equity | $ 6,080 | $ 5,782 |
Condensed Consolidated Balance6
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Other intangible assets - accumulated amortization (in dollars) | $ 139 | $ 106 |
Preferred stock, authorized shares | 25,000,000 | 25,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, issued shares | 0 | 0 |
Common stock, authorized shares | 200,000,000 | 200,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares issued | 77,810,875 | 77,810,875 |
Treasury stock, shares | 5,815,904 | 5,396,526 |
Common Stock Issued | ||
Common stock, shares issued | 77,811,000 | 77,811,000 |
Treasury Stock | ||
Common stock, shares issued | 5,815,000 | 5,397,000 |
Common Stock Shares Outstanding | ||
Common stock, shares issued | 71,996,000 | 72,414,000 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Equity - USD ($) $ in Millions | Common Stock | Additional Paid-in Capital | Treasury Stock | Accumulated Other Comprehensive Loss | Retained Earnings | Non-controlling Interests | Total |
Balance at Dec. 31, 2014 | $ 1 | $ 1,164 | $ (481) | $ (782) | $ 2,275 | $ 30 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income attributable to Ingredion | 402 | $ 402 | |||||
Net income attributable to non-controlling interests | 10 | (10) | |||||
Dividends declared | (125) | (4) | |||||
Repurchases of common stock | (34) | ||||||
Share-based compensation, net of issuance | (4) | 48 | 2 | ||||
Other comprehensive income (loss) | (320) | (320) | |||||
Balance at Dec. 31, 2015 | 1 | 1,160 | (467) | (1,102) | 2,552 | 36 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income attributable to Ingredion | 485 | 485 | |||||
Net income attributable to non-controlling interests | 11 | (11) | |||||
Dividends declared | (138) | (7) | |||||
Share-based compensation, net of issuance | (11) | 54 | 6 | ||||
Other comprehensive income (loss) | 31 | (10) | 31 | ||||
Balance at Dec. 31, 2016 | 1 | 1,149 | (413) | (1,071) | 2,899 | 30 | 2,595 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income attributable to Ingredion | 519 | 519 | |||||
Net income attributable to non-controlling interests | 13 | (13) | |||||
Dividends declared | (159) | (15) | |||||
Repurchases of common stock | (123) | ||||||
Share-based compensation, net of issuance | (11) | 42 | 6 | ||||
Other comprehensive income (loss) | 58 | (2) | 58 | ||||
Balance at Dec. 31, 2017 | $ 1 | $ 1,138 | $ (494) | $ (1,013) | $ 3,259 | $ 26 | $ 2,917 |
Condensed Consolidated Stateme8
Condensed Consolidated Statement of Redeemable Equity $ in Millions | USD ($) |
Beginning Balance at Dec. 31, 2014 | $ 22 |
Condensed Consolidated Statements of Equity and Redeemable Equity | |
Share-based compensation, net of issuance | 2 |
Ending Balance at Dec. 31, 2015 | 24 |
Condensed Consolidated Statements of Equity and Redeemable Equity | |
Share-based compensation, net of issuance | 6 |
Ending Balance at Dec. 31, 2016 | 30 |
Condensed Consolidated Statements of Equity and Redeemable Equity | |
Share-based compensation, net of issuance | 6 |
Ending Balance at Dec. 31, 2017 | $ 36 |
Condensed Consolidated Stateme9
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash provided by operating activities | |||
Net income | $ 532 | $ 496 | $ 412 |
Non-cash charges to net income: | |||
Depreciation and amortization | 209 | 196 | 194 |
Mechanical stores expense | 57 | 57 | 57 |
Deferred income taxes | 67 | (5) | (6) |
Write-off of impaired assets | 10 | ||
Gain on sale of plant | (10) | ||
Charge for fair value markup of acquired inventory | 9 | 10 | |
Other | 39 | 44 | 39 |
Changes in working capital: | |||
Accounts receivable and prepaid expenses | (44) | (131) | (29) |
Inventories | (34) | (19) | 9 |
Accounts payable and accrued liabilities | (49) | 127 | 30 |
Margin accounts | 6 | 15 | (34) |
Other | (23) | (9) | 4 |
Cash provided by operating activities | 769 | 771 | 686 |
Cash used for investing activities | |||
Payments for acquisitions, net of cash acquired of $-, $4, and $16, respectively | (17) | (407) | (434) |
Capital expenditures and mechanical stores purchases | (314) | (284) | (280) |
Investment in non-consolidated affiliate | (2) | ||
Short-term investments | (3) | 1 | 27 |
Proceeds from disposal of plants and properties | 8 | 3 | 38 |
Cash used for investing activities | (326) | (689) | (649) |
Cash used for financing activities | |||
Proceeds from borrowings | 1,144 | 1,000 | 1,388 |
Payments on debt | (1,240) | (874) | (1,366) |
Debt issuance costs | (6) | ||
Repurchase of common stock | (123) | (8) | (41) |
Issuances of common stock for share-based compensation, net of settlements | 9 | 29 | 21 |
Dividends paid (including to non-controlling interests) | (165) | (141) | (126) |
Excess tax benefit on share-based compensation | 8 | ||
Cash used for financing activities | (375) | (116) | |
Effects of foreign exchange rate changes on cash | 15 | (4) | (67) |
Increase (decrease) in cash and cash equivalents | 83 | 78 | (146) |
Cash and cash equivalents, beginning of period | 512 | 434 | 580 |
Cash and cash equivalents, end of period | $ 595 | $ 512 | $ 434 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed Consolidated Statements of Cash Flows | ||
Cash acquired from acquisition | $ 4 | $ 16 |
Description of the Business
Description of the Business | 12 Months Ended |
Dec. 31, 2017 | |
Description of the Business | |
Description of the Business | NOTE 1 – Description of the Business Ingredion Incorporated (“the Company”) was founded in 1906 and became an independent and public company as of December 31, 1997. The Company primarily manufactures and sells sweetener, starches, nutrition ingredients, and biomaterial solutions derived from the wet milling and processing of corn and other starch-based materials to a wide range of industries, both domestically and internationally. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | NOTE 2 – Summary of Significant Accounting Policies Basis of presentation : The consolidated financial statements consist of the accounts of the Company, including all significant subsidiaries. Intercompany accounts and transactions are eliminated in consolidation. The preparation of the accompanying consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the value of purchase consideration, valuation of accounts receivable, inventories, goodwill, intangible assets and other long-lived assets, legal contingencies, guarantee obligations, and assumptions used in the calculation of income taxes, and pension and other postretirement benefits, among others. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management will adjust such estimates and assumptions when facts and circumstances dictate. Foreign currency devaluations, corn price volatility, access to difficult credit markets, and adverse changes in the global economic environment have combined to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the financial statements in future periods. Assets and liabilities of foreign subsidiaries, other than those whose functional currency is the U.S. dollar, are translated at current exchange rates with the related translation adjustments reported in equity as a component of accumulated other comprehensive income (loss). The U.S. dollar is the functional currency for the Company’s Mexican subsidiary. Income statement accounts are translated at the average exchange rate during the period. However, significant non-recurring items related to a specific event are recognized at the exchange rate on the date of the significant event. For foreign subsidiaries where the U.S. dollar is the functional currency, monetary assets and liabilities are translated at current exchange rates with the related adjustment included in net income. Non-monetary assets and liabilities are translated at historical exchange rates. Although the Company hedges the predominance of its transactional foreign exchange risk (see Note 6), the Company incurs foreign currency transaction gains and losses relating to assets and liabilities that are denominated in a currency other than the functional currency. For 2017, 2016, and 2015, the Company incurred foreign currency transaction net losses of $5 million, $3 million, and $6 million, respectively. The Company’s accumulated other comprehensive loss included in equity on the Consolidated Balance Sheets includes cumulative translation losses of approximately $1 billion at both December 31, 2017 and 2016. Cash and cash equivalents: Cash equivalents consist of all instruments purchased with an original maturity of three months or less, and which have virtually no risk of loss in value. Accounts receivable, net : Accounts receivable, net, consist of trade and other receivables carried at approximate fair value, net of an allowance for doubtful accounts based on specific identification of material amounts at risk and a general reserve based on historical collection experience. Inventories: Inventories are stated at the lower of cost or net realizable value. Costs are predominantly determined using the weighted average method. Investments: Investments in the common stock of affiliated companies over which the Company does not exercise significant influence are accounted for under the cost method. In 2016, the Company invested in SweeGen Inc., which it accounts for under the cost method and which had a carrying value of $2 million as of both December 31, 2017 and 2016. Investments that enable the Company to exercise significant influence, but do not represent a controlling interest, are accounted for under the equity method; such investments are carried at cost, adjusted to reflect the Company’s proportionate share of income or loss, less dividends received. The Company did not have any investments accounted for under the equity method at December 31, 2017, or 2016. The Company has equity interests in the CME Group Inc. and CBOE Holdings, Inc., which are classified as available for sale securities. The investments are carried at fair value with unrealized gains and losses recorded to other comprehensive income. The Company would recognize a loss on its investments when there is a loss in value of an investment that is other than temporary. Investments are included in other assets in the Consolidated Balance Sheets and are not significant. Leases: The Company leases rail cars, certain machinery and equipment, and office space. The Company classifies its leases as either capital or operating based on the terms of the related lease agreement and the criteria contained in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 840, Leases, and related interpretations. Property, plant and equipment and depreciation: Property, plant and equipment (“PP&E”) are stated at cost less accumulated depreciation. Depreciation is generally computed on the straight-line method over the estimated useful lives of depreciable assets, which range from 25 to 50 years for buildings and from two to 25 years for all other assets. Where permitted by law, accelerated depreciation methods are used for tax purposes. The Company recognized depreciation expense of $179 million, $171 million, and $172 million for the years ended December 31, 2017, 2016, and 2015, respectively. The Company reviews the recoverability of the net book value of PP&E for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable from estimated future cash flows expected to result from its use and eventual disposition. If this review indicates that the carrying values will not be recovered, the carrying values would be reduced to fair value and an impairment loss would be recognized. As required under accounting principles generally accepted in the U.S., the impairment analysis for long-lived assets occurs before the goodwill impairment assessment described below. Goodwill and other intangible assets: Goodwill ($803 million and $784 million at December 31, 2017 and 2016, respectively) represents the excess of the cost of an acquired entity over the fair value assigned to identifiable assets acquired and liabilities assumed. The Company also has other intangible assets of $493 million and $502 million at December 31, 2017 and 2016, respectively. The carrying value of goodwill by reportable business segment at December 31, 2017 and 2016 was as follows: North South Asia (in millions) America America Pacific EMEA Total Balance at December 31, 2015 $ 424 $ 22 $ 86 $ 69 $ 601 Acquisitions 186 — — — 186 Currency translation — 4 (1) (6) (3) Balance at December 31, 2016 610 26 85 63 784 Acquisitions (10) (a) — 15 — 5 Currency translation — — 7 7 14 Balance at December 31, 2017 $ 600 $ 26 $ 107 $ 70 $ 803 (a) Related to TIC Gums Incorporated (“TIC Gums”) purchase price accounting adjustments The original carrying value of goodwill by reportable business segment and accumulated impairment charges by reportable business segment at December 31, 2017 and 2016 were as follows: North South Asia America America Pacific EMEA Total Goodwill before impairment charges $ 611 $ 59 $ 206 $ 63 $ 939 Accumulated impairment charges (1) (33) (121) — (155) Balance at December 31, 2016 610 26 85 63 784 Goodwill before impairment charges 601 59 228 70 958 Accumulated impairment charges (1) (121) — (155) Balance at December 31, 2017 $ 600 $ 26 $ 107 $ 70 $ 803 The following table summarizes the Company’s other intangible assets for the periods presented: As of December 31, 2017 (in millions) Gross Accumulated Amortization Net Weighted Average Useful Life (years) Trademarks/tradenames (indefinite-lived) $ 178 $ — $ 178 — Customer relationships 329 (62) 267 20 Technology 103 (68) 35 9 Other 22 (9) 13 16 Total other intangible assets $ 632 $ (139) $ 493 18 As of December 31, 2016 (in millions) Gross Accumulated Amortization Net Weighted Average Useful Life (years) Trademarks/tradenames (indefinite-lived) $ 143 $ — $ 143 — Customer relationships 227 (42) 185 20 Technology 100 (57) 43 10 TIC Gums intangible assets (preliminary) 117 — 117 Various Other 21 (7) 14 16 Total other intangible assets $ 608 $ (106) $ 502 17 For definite-lived intangible assets, the Company recognizes the cost of such amortizable assets in operations over their estimated useful lives and evaluates the recoverability of the assets whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Amortization expense related to intangible assets was $30 million in 2017, $25 million in 2016, and $22 million in 2015. Based on acquisitions completed through December 31, 2017, including the purchase price allocations for Sun Flour Industry Co., Ltd. (“Sun Flour”), intangible asset amortization expense for the next five years is shown below. The amortization is subject to change based on finalization of the purchase accounting for Sun Flour. (in millions) Year Amortization Expense 2018 $ 29 2019 29 2020 27 2021 19 2022 18 Balance thereafter 193 The Company assesses goodwill and other indefinite-lived intangible assets for impairment annually (or more frequently if impairment indicators arise). The Company has chosen to perform this annual impairment assessment as of October 1 of each year. In testing goodwill for impairment, the Company first assesses qualitative factors in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. After assessing the qualitative factors, if the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount then the Company does not perform the two-step impairment test. If the Company concludes otherwise, then it performs the first step of the two-step impairment test as described in ASC Topic 350. In the first step (“Step One”), the fair value of the reporting unit is compared to its carrying value. If the fair value of the reporting unit exceeds the carrying value of its net assets, goodwill is not considered impaired and no further testing is required. If the carrying value of the net assets exceeds the fair value of the reporting unit, a second step (“Step Two”) of the impairment assessment is performed in order to determine the implied fair value of a reporting unit's goodwill. Determining the implied fair value of goodwill requires a valuation of the reporting unit's tangible and intangible assets and liabilities in a manner similar to the allocation of purchase price in a business combination. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of its goodwill, goodwill is deemed impaired and is written down to the extent of the difference. Based on the results of the annual assessment, the Company concluded that as of October 1, 2017, it was more likely than not that the fair value of our reporting units was greater than their carrying value. We continue to monitor our reporting units in struggling economies and recent acquisitions for challenges in the business that may negatively impact the fair value of these reporting units. In testing indefinite-lived intangible assets for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is impaired. After assessing the qualitative factors, if the Company determines that it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, then it would not be required to compute the fair value of the indefinite-lived intangible asset. In the event the qualitative assessment leads the Company to conclude otherwise, then it would be required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test in accordance with ASC subtopic 350-30. In performing the qualitative analysis, the Company considers various factors including net sales derived from these intangibles and certain market and industry conditions. Based on the results of this qualitative assessment, the Company concluded that as of October 1, 2017, it was more likely than not that the fair value of the indefinite-lived intangible assets was greater than their carrying value. Revenue recognition: The Company recognizes operating revenues at the time title to the goods and all risks of ownership transfer to the customer. This transfer is considered complete when a sales agreement is in place, delivery has occurred, pricing is fixed or determinable and collection is reasonably assured. In the case of consigned inventories, the title passes and the transfer of ownership risk occurs when the goods are used by the customer. Taxes assessed by governmental authorities and collected from customers are accounted for on a net basis and excluded from revenues. Hedging instruments: The Company uses derivative financial instruments principally to offset exposure to market risks arising from changes in commodity prices, foreign currency exchange rates and interest rates. Derivative financial instruments used by the Company consist of commodity futures and option contracts, forward currency contracts and options, interest rate swap agreements and Treasury lock agreements (“T-Locks”). The Company enters into futures and option contracts, which are designated as hedges of specific volumes of commodities (primarily corn and natural gas) that will be purchased in a future month. These derivative financial instruments are recognized in the Consolidated Balance Sheets at fair value. The Company has also entered into interest rate swap agreements that effectively convert the interest rate on certain fixed rate debt to a variable interest rate and, on certain variable rate debt, to a fixed interest rate. The Company periodically enters into T-Locks to hedge its exposure to interest rate changes. See also Note 6 and Note 7 of the Notes to the Consolidated Financial Statements for additional information. On the date a derivative contract is entered into, the Company designates the derivative as either a hedge of variable cash flows to be paid related to interest on variable rate debt, as a hedge of market variation in the benchmark rate for a future fixed rate debt issue, as a hedge of foreign currency cash flows associated with certain forecasted commercial transactions or loans, as a hedge of certain forecasted purchases of corn, natural gas or ethanol used in the manufacturing process (“a cash flow hedge”), or as a hedge of the fair value of certain debt obligations (“a fair value hedge”). This process includes linking all derivatives that are designated as fair value or cash flow hedges to specific assets and liabilities on the Consolidated Balance Sheets, or to specific firm commitments or forecasted transactions. For all hedging relationships, the Company documents the hedging relationships and its risk-management objective and strategy for undertaking the hedge transactions, the hedging instrument, the hedged item, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed and a description of the method of measuring ineffectiveness. The Company also formally assesses both, at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows or fair values of hedged items. When it is determined that a derivative is not highly effective as a hedge or has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively. Changes in the fair value of floating-to-fixed interest rate swaps, T-Locks, commodity futures, and option contracts or foreign currency forward contracts, swaps, and options that are highly effective and that are designated and qualify as cash flow hedges are recorded in other comprehensive income, net of applicable income taxes. Realized gains and losses associated with changes in the fair value of interest rate swaps and T-Locks are reclassified from accumulated other comprehensive income (“AOCI”) to the Consolidated Statements of Income over the life of the underlying debt. Gains and losses on hedges of foreign currency cash flows associated with certain forecasted commercial transactions or loans are reclassified from AOCI to the Consolidated Statements of Income when such transactions or obligations are settled. Gains and losses on commodity hedging contracts are reclassified from AOCI to the Consolidated Statement of Income when the finished goods produced using the hedged item are sold. The maximum term over which the Company hedges exposures to the variability of cash flows for commodity price risk is generally 24 months. Changes in the fair value of a fixed-to-floating interest rate swap agreement that is highly effective and that is designated and qualifies as a fair value hedge, along with the loss or gain on the hedged debt obligation, are recorded in earnings. The ineffective portion of the change in fair value of a derivative instrument that qualifies as either a cash flow hedge or a fair value hedge is reported in earnings. The Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the cash flows or fair value of the hedged item, the derivative is de-designated as a hedging instrument because it is unlikely that a forecasted transaction will occur, or management determines that designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued, the Company continues to carry the derivative on the Consolidated Balance Sheets at its fair value, and gains and losses that were included in AOCI are recognized in earnings in the same line item affected by the hedged transaction and in the same period or periods during which the hedged transaction affects earnings, or in the month a hedge is determined to be ineffective. The Company uses derivative financial instruments such as foreign currency forward contracts, swaps and options to manage the transactional foreign exchange risk that is created when transactions not denominated in the functional currency of the operating unit are revalued. The changes in fair value of these derivative instruments and the offsetting changes in the value of the underlying non-functional currency denominated transactions are recorded in earnings on a monthly basis. Share-based compensation: The Company has a stock incentive plan that provides for share-based employee compensation, including the granting of stock options, shares of restricted stock, restricted stock units, and performance shares to certain key employees. Compensation expense is recognized in the Consolidated Statements of Income for the Company’s share-based employee compensation plan. The plan is more fully described in Note 12 of the Notes to the Consolidated Financial Statements. Earnings per common share: Basic earnings per common share (“EPS”) is computed by dividing net income attributable to Ingredion by the weighted average number of shares outstanding, which totaled 72.0 million for 2017, 72.3 million for 2016 and 71.6 million for 2015. Diluted EPS is calculated using the treasury stock method, computed by dividing net income attributable to Ingredion by the weighted average number of shares outstanding, including the dilutive effect of outstanding stock options and other instruments associated with long-term incentive compensation plans. The weighted average number of shares outstanding for diluted EPS calculations was 73.5 million, 74.1 million and 73.0 million for 2017, 2016, and 2015, respectively. Approximately 0.3 million, 0, and 0.3 million share-based awards of common stock were excluded in 2017, 2016, and 2015, respectively, from the calculation of the weighted average number of shares outstanding for diluted EPS because their effects were anti-dilutive. Risks and uncertainties: The Company operates domestically and internationally. In each country, the business and assets are subject to varying degrees of risk and uncertainty. The Company insures its business and assets in each country against insurable risks in a manner that it deems appropriate. Because of this geographic dispersion, the Company believes that a loss from non-insurable events in any one country would not have a material adverse effect on the Company’s operations as a whole. Additionally, the Company believes there is no significant concentration of risk with any single customer or supplier whose failure or non-performance would materially affect the Company’s results. 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 will adopt the standard as of the effective date, January 1, 2018. The standard will allow various transition approaches upon adoption. We plan to use the modified retrospective approach 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 have a material impact on the Company’s revenue recognition timing or amounts, as we have not identified any material 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 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 approach for the transition. We expect the adoption of the guidance in this Update to have a material impact on our Consolidated Balance Sheets, as operating leases will be recognized both as assets and liabilities on the Consolidated Balance Sheets. We are in the process of quantifying the magnitude of these changes and assessing the implementation approach for accounting for these changes. 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. 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 Consolidated Statements of Income for the non-operating income (loss) components. Net income within the 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. |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2017 | |
Acquisitions | |
Acquisitions | NOTE 3 – Acquisitions On March 9, 2017, the Company completed its acquisition of Sun Flour in Thailand for $18 million. As of December 31, 2017, the Company had paid $16 million in cash and recorded $2 million in accrued liabilities for deferred payments due to the previous owner. The Company funded the acquisition primarily with cash on-hand. 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. 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, and $14 million of goodwill was allocated to that segment. On December 29, 2016, the Company completed its acquisition of 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. The results of the acquired operations are included in the Company’s consolidated results from the respective acquisition dates forward within the North America and Asia Pacific business segments, and $175 million and $2 million of goodwill was allocated to those segments, respectively. On November 29, 2016, the Company completed its acquisition of Shandong Huanong Specialty Corn Development Co., Ltd. (“Shandong Huanong”) in China for $12 million in cash. The 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. On August 3, 2015, the Company completed its acquisition of Kerr Concentrates, Inc. (“Kerr”), a privately held producer of natural fruit and vegetable concentrates for $102 million in cash. Kerr serves major food and beverage companies, flavor houses and ingredient producers from its manufacturing locations in Oregon and California. The acquisition of Kerr provided the Company with the opportunity to expand its product portfolio. The Company finalized the purchase price allocation during the first quarter of 2016, which did not have a significant impact on previously estimated amounts. As a result of the acquisition, $27 million of goodwill was allocated to the North America segment. On March 11, 2015, the Company completed its acquisition of Penford Corporation (“Penford”), a manufacturer of specialty starches that was headquartered in Centennial, Colorado. Total purchase consideration for Penford was $332 million, which included the extinguishment of $93 million in debt in conjunction with the acquisition. Purchase accounting for Penford was completed in 2015. The acquisition of Penford provides the Company with, among other things, an expanded specialty ingredient product portfolio consisting of potato starch-based offerings. Penford operates six manufacturing facilities in the U.S., all of which manufacture specialty starches. As a result of the acquisition, $121 million of goodwill was allocated to the North America 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 assets acquired and liabilities assumed for each acquisition in the transactions are generally recorded at their estimated acquisition date fair values, while transaction costs associated with the acquisitions were expensed as incurred. Goodwill and intangible assets are open to be finalized for purchase accounting for Sun Flour as of December 31, 2017. Goodwill represents the amount by which the purchase price exceeds the estimated fair value of the net assets acquired. The goodwill of $177 million and $27 million for TIC Gums and Kerr, respectively, result from synergies and other operational benefits expected to be derived from the acquisitions. The goodwill related to TIC Gums, Shandong, and Kerr acquisitions is tax deductible due to the structure of the acquisitions. The goodwill related to Sun Flour is not tax deductible. The following table summarizes the finalized purchase price allocations for the acquisitions of TIC Gums and Kerr as of December 29, 2016, and August 3, 2015, respectively: (in millions) TIC Gums Kerr Working capital (excluding cash) $ 49 $ 37 Property, plant and equipment 37 8 Other assets — 1 Identifiable intangible assets 133 29 Goodwill 177 27 Total purchase price, net of cash $ 396 $ 102 The identifiable intangible assets for the acquisition of TIC Gums and Kerr included items such as customer relationships, trade names, proprietary technology, and non-competition agreements. The fair values of these intangible assets were determined to be Level 3 under the fair value hierarchy. Level 3 inputs are unobservable inputs for an asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for fair value estimates to be made in situations in which there is little, if any, market activity for an asset or liability at the measurement date. For more information on the fair value hierarchy, see Note 6. The following table presents the fair values, valuation techniques, and estimated remaining useful life at the acquisition date for these Level 3 measurements (dollars in millions): Estimated TIC Gums 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 Estimated Kerr Fair Value Valuation Technique Useful Life Customer relationships $ 24 Multi-period excess earnings method 15 years Trade names 4 Relief-from-royalty method 11 years Non-competition agreements 1 Income approach method 3 years The fair value of customer relationships, trade names, proprietary technology, and non-competition agreements were determined through the valuation techniques described above using various judgmental assumptions such as discount rates, royalty rates, and customer attrition rates, as applicable. The fair values of property, plant and equipment associated with the acquisitions were determined to be Level 3 under the fair value hierarchy. Property, plant and equipment values were estimated using either the cost or market approach. The acquisitions of Sun Flour and Shandong Huanong added $21 million to goodwill and identifiable intangible assets and $9 million to net tangible assets as of their respective acquisition dates. Included in the results of the acquired businesses for the years ended December 31, 2017 and 2015 was an increase in pre-tax cost of sales of $9 million and $10 million, respectively, 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 year ended December 31, 2016, were not material. Pro-forma results of operations for the acquisitions made in 2017, 2016, and 2015 have not been presented as the effect of each acquisition individually and in aggregate would not be material to the Company’s results of operations for any periods presented. The Company incurred $4 million, $3 million, and $10 million of pre-tax acquisition and integration costs in 2017, 2016, and 2015, respectively, associated with its acquisitions. |
Sale of Canadian Plant
Sale of Canadian Plant | 12 Months Ended |
Dec. 31, 2017 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Sale of Canadian Plant | NOTE 4 – Sale of Canadian Plant On December 15, 2015, the Company sold its manufacturing assets in Port Colborne, Ontario, Canada for $35 million in cash. The Company recorded a pre-tax gain of $10 million on the sale, net of the write-off of goodwill of $2 million associated with the business. The Company also recorded pre-tax restructuring charges of $4 million in 2015 associated with the sale of the plant as described below. Additionally, in 2016 the Company recorded pre-tax restructuring charges of $2 million related to the Port Colborne plant sale. |
Impairment and Restructuring Ch
Impairment and Restructuring Charges | 12 Months Ended |
Dec. 31, 2017 | |
Impairment and Restructuring Charges | |
Impairment and Restructuring Charges | NOTE 5 – Impairment and Restructuring Charges In 2017, the Company recorded $38 million of pre-tax restructuring charges. During the first quarter of 2017, the Company implemented an organizational restructuring effort in Argentina in order to achieve a more competitive cost position. The Company 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. The Company finalized a new labor agreement with the labor union in the second quarter, ending the strike on June 1, 2017. For the year ended December 31, 2017, the Company recorded total pre-tax restructuring-related charges in Argentina of $17 million for employee-related severance and other costs. During the second quarter of 2017, the Company announced a Finance Transformation initiative in North America for the U.S. and Canada businesses to strengthen organizational capabilities and drive efficiencies to support the growth strategy of the Company. For the year ended December 31, 2017, the Company recorded pre-tax restructuring charges of $6 million ($3 million of severance costs and $3 million of other costs) related to this initiative. The Company expects to incur between $1 million and $2 million of additional employee-related severance and other costs in 2018. During the fourth quarter of 2017, the Company recorded $13 million of pre-tax restructuring charges related to its leaf extraction process in Brazil. The charges consisted of $6 million of abandonment of certain assets, $6 million of inventory write downs and $1 million related to other costs, including employee-related severance costs. The Company expects to incur $1 million of additional other costs in 2018. Additionally for the year ended December 31, 2017, the Company recorded $2 million of other pre-tax restructuring charges including other employee-related severance costs in North America and a refinement of estimates for prior year restructuring activities. In 2016, the Company recorded $19 million of restructuring charges consisting of $11 million of employee-related severance and other costs due to the execution of global information technology outsourcing contracts, $6 million of employee-related severance costs associated with the Company’s optimization initiatives in North America and South America, and $2 million of costs attributable to the 2015 Port Colborne plant sale. A summary of the Company’s severance accrual at December 31, 2017, is as follows (in millions): 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 3 Prior year restructuring activities (2) Payments made to terminated employees (15) Balance in severance accrual as of December 31, 2017 $ 11 Of the $11 million severance accrual at December 31, 2017, $10 million is expected to be paid within the next 12 months. The Company assesses goodwill and other indefinite-lived intangible assets for impairment annually (or more frequently if impairment indicators arise) as of October 1 of each year. No goodwill impairment was recognized in the fourth quarters of 2017, 2016, or 2015 related to the Company’s annual impairment testing. |
Financial Instruments, Derivati
Financial Instruments, Derivatives and Hedging Activities | 12 Months Ended |
Dec. 31, 2017 | |
Financial Instruments, Derivatives and Hedging Activities | |
Financial Instruments, Derivatives and Hedging Activities | NOTE 6 – Financial Instruments, Derivatives and Hedging Activities The Company is exposed to market risk stemming from changes in commodity prices (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 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. For example, the manufacturing of the Company’s products requires a significant volume of corn and natural gas. Price fluctuations in corn and natural gas cause the actual purchase price of corn and natural gas to differ from anticipated prices. To manage price risk related to corn purchases in North America, the Company uses corn futures and options contracts that trade on regulated commodity exchanges to lock-in its corn costs associated with firm-priced customer sales contracts. The Company uses over-the-counter natural gas swaps to hedge a portion of its natural gas usage in North America. These derivative financial instruments limit the impact that volatility resulting from fluctuations in market prices will have on corn and natural gas purchases and have been designated as cash flow hedges. The Company also enters into futures contracts to hedge price risk associated with fluctuations in the market price of ethanol. Unrealized gains and losses associated with marking the commodity hedging contracts to market (fair value) are recorded as a component of other comprehensive income (“OCI”) and included in the equity section of the Consolidated Balance Sheets as part of AOCI. These amounts are subsequently reclassified into earnings in the same line item affected by the hedged transaction and in the same period or periods during which the hedged transaction affects earnings, or in the month a hedge is determined to be ineffective. The Company assesses the effectiveness of a commodity hedge contract based on changes in the contract’s fair value. The changes in the market value of such contracts have historically been, and are expected to continue to be, highly effective at offsetting changes in the price of the hedged items. The amounts representing the ineffectiveness of these cash flow hedges are not significant. As of December 31, 2017, AOCI included $12 million of losses (net of tax of $7 million) pertaining to commodities-related derivative instruments designated as cash flow hedges. As of December 31, 2016, AOCI included an insignificant amount pertaining to commodities-related derivative instruments designated as cash flow hedges. Interest rate hedging : The Company assesses its exposure to variability in interest rates by identifying and monitoring changes in interest rates that may adversely impact future cash flows and the fair value of existing debt instruments, and by evaluating hedging opportunities. The Company maintains risk management control systems to monitor interest rate risk attributable to both the Company’s outstanding and forecasted debt obligations as well as the Company’s offsetting hedge positions. The risk management control systems involve the use of analytical techniques, including sensitivity analysis, to estimate the expected impact of changes in interest rates on future cash flows and the fair value of the Company’s outstanding and forecasted debt instruments. Derivative financial instruments that have been used by the Company to manage its interest rate risk consist of interest rate swaps and T-Locks. The Company periodically enters into T-Locks to hedge its exposure to interest rate changes. The T-Locks are designated as hedges of the variability in cash flows associated with future interest payments caused by market fluctuations in the benchmark interest rate until the fixed interest rate is established, and are accounted for as cash flow hedges. Accordingly, changes in the fair value of the T-Locks are recorded to AOCI until the consummation of the underlying debt offering, at which time any realized gain (loss) is amortized to earnings over the life of the debt. The Company also has interest rate swap agreements that effectively convert the interest rates on $200 million of its $400 million of 4.625 percent senior notes, due November 1, 2020, to variable rates. These swap agreements call for the Company to receive interest at the fixed coupon rate of the respective notes and to pay interest at a variable rate based on the six-month U.S. LIBOR rate plus a spread. The Company has designated these interest rate swap agreements as hedges of the changes in fair value of the underlying debt obligations attributable to changes in interest rates and accounts for them as fair value hedges. Changes in the fair value of interest rate swaps designated as hedging instruments that effectively offset the variability in the fair value of outstanding debt obligations are reported in earnings. These amounts offset the gain or loss (the change in fair value) of the hedged debt instrument that is attributable to changes in interest rates (the hedged risk), which is also recognized in earnings. The fair value of these interest rate swap agreements as of December 31, 2017 and 2016 was $1 million and $3 million, respectively, and is reflected in the Consolidated Balance Sheets within other assets, with an offsetting amount recorded in long-term debt to adjust the carrying amount of hedged debt obligations. The Company did not have any T-Locks outstanding as of December 31, 2017, or 2016. As of December 31, 2017 and 2016, AOCI included $2 million of losses (net of income taxes of $1 million) and $4 million of losses (net of income taxes of $2 million), respectively, related to settled T-Locks. These deferred losses are being amortized to financing costs over the terms of the senior notes with which they are associated. 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. As of December 31, 2017, the Company had foreign currency forward sales contracts that are designated as fair value hedges with an aggregate notional amount of $447 million and foreign currency forward purchase contracts with an aggregate notional amount of $121 million that hedged transactional exposures. As of 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. The fair values of these derivative instruments were assets of $11 million and $5 million at December 31, 2017 and 2016, respectively. The Company also has foreign currency derivative instruments that hedge certain foreign currency transactional exposures and are designated as cash flow hedges. As of December 31, 2017, AOCI included $1 million of gains (net of income taxes of $1 million) related to foreign currency derivative instruments. As of December 31, 2016, t he amounts included in AOCI related to these hedges were not significant. By using derivative financial instruments to hedge exposures, the Company exposes itself to credit risk and market risk. Credit risk is the risk that the counterparty will fail to perform under the terms of the derivative contract. When the fair value of a derivative contract is positive, the counterparty owes the Company, which creates credit risk for the Company. When the fair value of a derivative contract is negative, the Company owes the counterparty and, therefore, it does not possess credit risk. The Company minimizes the credit risk in derivative instruments by entering into over-the-counter transactions only with investment grade counterparties or by utilizing exchange-traded derivatives. Market risk is the adverse effect on the value of a financial instrument that results from a change in commodity prices, interest rates or foreign exchange rates. The market risk associated with commodity-price, interest rate or foreign exchange contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. The fair value and balance sheet location of the Company’s derivative instruments, presented gross in the Consolidated Balance Sheets, are reflected below: Fair Value of Derivative Instruments as of December 31, 2017 Derivatives Designated as Hedging Instruments (in millions): Balance Sheet Location Fair Value Balance Sheet Location Fair Value Commodity and foreign currency Accounts receivable, net $ 11 Accounts payable and accrued liabilities $ 23 Commodity, foreign currency, and interest rate contracts Other assets 3 Non-current liabilities 8 Total $ 14 $ 31 Fair Value of Derivative Instruments as of December 31, 2016 Derivatives Designated as Hedging Instruments (in millions): Balance Sheet Location Fair Value Balance Sheet Location Fair Value Commodity and foreign currency Accounts receivable, net $ 31 Accounts payable and accrued liabilities $ 25 Commodity, foreign currency, and interest rate contracts Other assets 8 Non-current liabilities 2 $ 39 $ 27 As of December 31, 2017, the Company had outstanding futures and option contracts that hedged the forecasted purchase of approximately 92 million bushels of corn and 16 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 35 million mmbtu’s of natural gas at December 31, 2017. Additionally at December 31, 2017, the Company had outstanding ethanol futures contracts that hedged the forecasted sale of approximately 4 million gallons of ethanol. Additional information relating to the Company’s derivative instruments is presented below (in millions, pre-tax): Year ended December 31, 2017 Derivatives in Cash Flow Hedging Relationships Amount of Gains Location of Gains (Losses) Reclassified from AOCI into Income Amount of Gains (Losses) Reclassified from AOCI into Income Commodity contracts $ (22) Cost of sales $ (5) Foreign currency contracts 6 Net sales/Cost of sales 1 Interest rate contracts — Financing costs, net (2) Total $ (16) $ (6) Year ended December 31, 2016 Derivatives in Cash Flow Hedging Relationships Amount of Gains Location of Gains (Losses) Reclassified from AOCI into Income Amount of Gains (Losses) Reclassified from AOCI into Income Commodity contracts $ (15) Cost of sales $ (45) Foreign currency contracts (2) Net sales/Cost of sales (2) Interest rate contracts — Financing costs, net (2) Total $ (17) $ (49) Year ended December 31, 2015 Derivatives in Cash Flow Hedging Relationships Amount of Gains Location of Gains (Losses) Reclassified from AOCI into Income Amount of Gains (Losses) Reclassified from AOCI into Income Commodity contracts $ (61) Cost of sales $ (43) Foreign currency contracts — Net sales/Cost of sales — Interest rate contracts — Financing costs, net (3) Total $ (61) $ (46) As of December 31, 2017, AOCI included approximately $9 million of losses (net of income taxes of $5 million), on commodities-related derivative instruments designated as cash flow hedges that are expected to be reclassified into earnings during the next 12 months. Transactions and events expected to occur over the next twelve months that will necessitate reclassifying these derivative losses to earnings include the sale of finished goods inventory that includes previously hedged purchases of corn, natural gas and ethanol. The Company expects the losses to be offset by changes in the underlying commodities costs. Additionally at December 31, 2017, AOCI included $1 million of losses (net of income taxes of $1 million) on settled T-Locks and $1 million of gains (net of income taxes of $1 million) related to foreign currency hedges which are expected to be reclassified into earnings during the next 12 months. Cash flow hedges discontinued during 2017 or 2016 were not significant. Presented below are the fair values of the Company’s financial instruments and derivatives for the periods presented: As of December 31, 2017 As of December 31, 2016 (in millions) Total Level 1 (a) Level 2 (b) Level 3 (c) Total Level 1 (a) Level 2 (b) Level 3 (c) Available for sale securities $ 10 $ 10 $ — $ — $ 7 $ 7 $ — $ — Derivative assets 14 3 11 — 39 6 33 — Derivative liabilities 31 11 20 — 27 11 16 — Long-term debt 1,845 — 1,845 — 1,929 — 1,929 — (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 used to measure fair value to the extent that observable inputs are not available, thereby allowing for fair value estimates to be made in situations in which there is little, if any, market activity for the asset or liability at the measurement date. The carrying values of cash equivalents, short-term investments, accounts receivable, accounts payable, and short-term borrowings approximate fair values. Commodity futures, options, and swap contracts are recognized at fair value. Foreign currency forward contracts, swaps, and options are also recognized at fair value. The fair value of the Company’s long-term debt is estimated based on quotations of major securities dealers who are market makers in the securities. Presented below are the carrying amounts and the fair values of the Company’s long-term debt at December 31, 2017 and 2016. December 31, 2017 December 31, 2016 Carrying Fair Carrying Fair (in millions) Amount Value Amount Value 3.2% senior notes due October 1, 2026 $ 496 $ 492 $ 496 $ 482 4.625% senior notes due November 1, 2020 398 421 398 428 6.625% senior notes due April 15, 2037 254 325 254 299 5.62% senior notes due March 25, 2020 200 212 200 217 1.8% senior notes due September 25, 2017 — — 299 301 6.0% senior notes due April 15, 2017 — — 200 202 Term loan credit agreement due April 25, 2019 395 395 — — Revolving credit facility — — — — Fair value adjustment related to hedged fixed rate debt instrument 1 — 3 — Total long-term debt $ 1,744 $ 1,845 $ 1,850 $ 1,929 |
Financing Arrangements
Financing Arrangements | 12 Months Ended |
Dec. 31, 2017 | |
Debt | |
Financing Arrangements | NOTE 7 – Financing Arrangements The Company had total debt outstanding of $1.9 billion and $2.0 billion at December 31, 2017 and 2016, respectively. Short-term borrowings at December 31, 2017 and 2016 consist primarily of amounts outstanding under various unsecured local country operating lines of credit. The $200 million of 6.0 percent senior notes due April 15, 2017, were refinanced with borrowings under the revolving credit facility in April 2017. On August 18, 2017, the Company entered into a new Term Loan Credit Agreement (“Term Loan”) to establish a senior unsecured term loan credit facility. Under the Term Loan, the Company is allowed three borrowings in an amount of up to $500 million total. The Term Loan matures 18 months from the date of the final borrowing. As of October 25, 2017, the Company had initiated all three borrowings under the Term Loan totaling $420 million, due April 25, 2019. The proceeds were used to refinance $300 million of 1.8 percent senior notes due September 25, 2017, and pay down borrowings outstanding on the revolving credit facility. 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. In December 2017, the Company paid down $25 million of the Term Loan. On January 16, 2018, the Company paid an additional $185 million towards the Term Loan. Both payments were made with cash on-hand. On September 22, 2016, the Company issued 3.2 percent Senior Notes due October 1, 2026, in an aggregate principal amount of $500 million. These notes are unsecured obligations of the Company and rank equally with all of the Company’s other existing and future unsecured, senior indebtedness. Interest on the notes is required to be paid semi-annually in arrears on April 1 and October 1 of each year, commencing April 1, 2017. The Company may redeem these notes at its option, at any time in whole or from time to time in part, at the redemption prices set forth in the supplemental indenture pursuant to which these notes were issued. The net proceeds from the sale of the notes of approximately $497 million were used to repay the $350 million due under the Company’s Term Loan Credit Agreement, plus accrued interest, to repay $52 million of borrowings under the Company’s previously existing $1 billion revolving credit facility and for general corporate purposes. On October 11, 2016, the Company entered into a new five-year, senior, unsecured $1 billion revolving credit agreement (the “Revolving Credit Agreement”) that replaced our previously existing $1 billion senior unsecured revolving credit facility that would have matured on October 22, 2017. Subject to certain terms and conditions, the Company may increase the amount of the revolving facility under the Revolving Credit Agreement by up to $500 million in the aggregate. The Company may also obtain up to two one-year extensions of the maturity date of the Revolving Credit Agreement at its requests and subject to the agreement of the lenders. All committed pro rata borrowings under the revolving facility will bear interest at a variable annual rate based on the LIBOR or base rate, at the Company’s election, subject to the terms and conditions thereof, plus, in each case, an applicable margin based on the Company’s leverage ratio (as reported in the financial statements delivered pursuant to the Revolving Credit Agreement) or the Company’s credit rating. Subject to specified conditions, the Company may designate one or more of its subsidiaries as additional borrowers under the Revolving Credit Agreement provided that the Company guarantees all borrowings and other obligations of any such subsidiaries thereunder. The Revolving Credit Agreement contains customary representations, warranties, covenants, events of default, terms and conditions, including limitations on liens, incurrence of subsidiary debt and mergers. The Company must also comply with a leverage ratio covenant and an interest coverage ratio covenant. The occurrence of an event of default under the Revolving Credit Agreement could result in all loans and other obligations under the agreement being declared due and payable and the revolving credit facility being terminated. As of December 31, 2017, there were no borrowings outstanding under the Revolving Credit Agreement. In addition to borrowing availability under its Revolving Credit Agreement, the Company has approximately $488 million of unused operating lines of credit in the various foreign countries in which it operates. Long-term debt, net of related discounts, premiums and debt issuance costs consists of the following at December 31: (in millions) 2017 2016 3.2% senior notes due October 1, 2026 $ 496 $ 496 4.625% senior notes due November 1, 2020 398 398 6.625% senior notes due April 15, 2037 254 254 5.62% senior notes due March 25, 2020 200 200 1.8% senior notes due September 25, 2017 — 299 6.0% senior notes due April 15, 2017 — 200 Term loan credit agreement due April 25, 2019 395 — Revolving credit facility — — Fair value adjustment related to hedged fixed rate debt instruments 1 3 Long-term debt 1,744 1,850 Short-term borrowings 120 106 Total debt $ 1,864 $ 1,956 The Company’s long-term debt matures as follows: $600 million in 2020, $500 million in 2026, and $250 million in 2037. The Company’s term loan of $395 million matures in 2019. The Company guarantees certain obligations of its consolidated subsidiaries. The amount of the obligations guaranteed aggregated $56 million and $121 million at December 31, 2017 and 2016, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2017 | |
Leases | |
Leases | NOTE 8 – Leases The Company leases rail cars, certain machinery and equipment, and office space under various operating leases. Rental expense under operating leases was $51 million, $53 million and $52 million in 2017, 2016, and 2015, respectively. Minimum lease payments due on non-cancellable leases existing at December 31, 2017, are shown below: Year (in millions) Minimum Lease Payments 2018 $ 45 2019 40 2020 31 2021 25 2022 20 Balance thereafter 36 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Income Taxes | NOTE 9 – Income Taxes The components of income before income taxes and the provision for income taxes are shown below: (in millions) 2017 2016 2015 Income before income taxes: U.S. $ 226 $ 176 $ 109 Foreign 543 566 490 Total income before income taxes 769 742 599 Provision for income taxes: Current tax (benefit) expense: U.S. federal (13) 95 26 State and local 4 8 3 Foreign 179 148 164 Total current tax expense 170 251 193 Deferred tax expense (benefit): U.S. federal 77 13 (8) State and local 4 1 (1) Foreign (14) (19) 3 Total deferred tax expense (benefit) 67 (5) (6) Total provision for income taxes $ 237 $ 246 $ 187 Deferred income taxes are provided for the tax effects of temporary differences between the financial reporting basis and tax basis of assets and liabilities. Significant temporary differences as of December 31, 2017 and 2016 are summarized as follows: (in millions) 2017 2016 Deferred tax assets attributable to: Employee benefit accruals $ 20 $ 39 Pensions and postretirement plans 20 30 Derivative contracts 5 3 Net operating loss carryforwards 32 18 Foreign tax credit carryforwards — 4 Other — 24 Gross deferred tax assets 77 118 Valuation allowances (34) (21) Net deferred tax assets 43 97 Deferred tax liabilities attributable to: Property, plant and equipment 185 206 Identified intangibles 37 55 Other 11 — Gross deferred tax liabilities 233 261 Net deferred tax liabilities $ 190 $ 164 Of the $32 million of tax-effected net operating loss carryforwards as of December 31, 2017, approximately $9 million are for state loss carryforwards and approximately $23 million are for foreign loss carryforwards. Of the $18 million of tax-effected net operating loss carryforwards as of December 31, 2016, approximately $8 million are for state loss carryforwards. Income tax accounting requires that a valuation allowance be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. In making this assessment, management considers the level of historical taxable income, scheduled reversal of deferred tax liabilities, tax planning strategies, tax carryovers, and projected future taxable income. As of December 31, 2017, the Company maintains valuation allowances of $9 million for state loss carryforwards, $2 million for state credits, and $21 million for foreign loss carryforwards that management has determined will more likely than not expire prior to realization. As of December 31, 2016, the Company maintains valuation allowances of $8 million for state loss carryforwards, $2 million for state credits and $9 million for foreign loss carryforwards that management has determined will more likely than not expire prior to realization. In addition, the Company maintains valuation allowances on foreign subsidiaries’ net deferred tax assets of $2 million for both the years ended December 31, 2017 and 2016. A reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate follows: 2017 2016 2015 Provision for tax at U.S. statutory rate 35.0 % 35.0 % 35.0 % Tax rate difference on foreign income (5.6) (5.5) (5.8) State and local taxes, net 0.7 0.3 0.3 Tax impact of fluctuations in Mexican peso to U.S. dollar (0.5) 2.4 2.9 Net impact of U.S. foreign tax credits 0.3 (2.3) 0.9 Net impact of U.S.-Canada tax settlement (1.3) 3.2 — Net impact of valuation allowance in Argentina 2.0 1.0 — Net impact of transition tax 2.7 — — Net impact of U.S. deferred tax remeasurement (4.9) — — Net impact of provision for taxes on unremitted earnings 4.3 0.5 — Other items, net (1.9) (1.5) (2.1) Provision at effective tax rate 30.8 % 33.1 % 31.2 % The Company has significant operations in Canada, Mexico, and Pakistan where the statutory tax rates are 25 percent, 30 percent and 30 percent in 2017, respectively. In addition, the Company's subsidiary in Brazil has a statutory tax rate of 34 percent before local incentives that vary each year. The Tax Cuts and Jobs Act (“TCJA”) was enacted on December 22, 2017. The TCJA introduced numerous changes in the U.S. federal tax laws. Changes that have a significant impact on our effective tax rate are a reduction in the U.S. corporate tax rate from 35 percent to 21 percent and the imposition of a U.S. tax on our global intangible low-taxed income (“GILTI”). The TCJA also provides for a one-time transition tax on the deemed repatriation of cumulative foreign earnings as of December 31, 2017, and eliminates the tax on dividends from our foreign subsidiaries by allowing a 100 percent dividends received deduction. On December 22, 2017, Staff Accounting Bulletin No. 118 (“SAB 118”) was issued to provide guidance on the application of GAAP to situations in which the registrant does not have all the necessary information available, prepared or analyzed (including computations) in sufficient detail to complete the accounting for the income tax effects of the TCJA. The Company has calculated what it believes is a reasonable estimate of the impact of the TCJA in accordance with SAB 118 and its understanding of the TCJA, including published guidance as of the date of this filing, and has recorded $23 million of provisional income tax expense in the fourth quarter of 2017, the period in which the TCJA was enacted. The provisional amount of $23 million is composed of the following four items: (in millions) One-time transition tax $ 21 Remeasurement of deferred tax assets and liabilities (38) Net impact of provision for taxes on unremitted earnings 33 Other items, net 7 Net impact of the TCJA on our 2017 income tax expense $ 23 The Company may update its estimate in 2018 as additional information, including guidance from federal and state regulatory agencies, becomes available and it finalizes its computations, which are complex and subject to interpretation. Any adjustment to these provisional tax amounts will be recorded in the quarter of 2018 in which the analysis is completed. Under a provision in the TCJA, all of the undistributed earnings of our foreign subsidiaries were deemed to be repatriated at December 31, 2017, and were subjected to a transition tax. As a result, a provisional transition tax liability of $21 million, or 2.7 percentage points on effective tax rate, was recorded in income from continuing operations in the fourth quarter of 2017. Although these earnings that were deemed to be repatriated are not subject to additional U.S. federal income tax upon distribution, these earnings could be subject to foreign withholding and state income tax upon distribution. In addition, distributions of these previously-taxed earnings could give rise to taxable exchange gain or loss in the U.S. As a result of the reduction in the U.S. corporate tax rate, the Company recorded a provisional tax benefit of $38 million, or 4.9 percentage points on the effective tax rate, due to the remeasurement of its U.S. net deferred tax liabilities. Due to a change in the U.S. tax treatment of dividends received from foreign subsidiaries, the Company has recorded a provisional tax liability of $33 million, or 4.3 percentage points on the effective tax rate, for foreign dividend withholding and state income taxes payable upon the distribution of unremitted earnings from certain foreign subsidiaries from which it expects to receive cash distributions in 2018 and beyond. The net impact of the TCJA on its 2017 tax expense includes a provisional tax liability of $7 million, or 0.9 percentage points on the effective tax rate (included in other items, net), for the difference in its 2017 tax expense as calculated with and without the changes triggered by the TCJA. Because of the complexity of the new GILTI rules, the Company is continuing to evaluate this provision of the TCJA for the application of ASC 740. Under GAAP, the Company is allowed to make an accounting policy choice of either treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or factoring such amounts into our measurement of our deferred taxes (the “deferred method”). The Company has not made any adjustments related to potential GILTI tax in its financial statements, as it has not made a policy decision regarding whether to record deferred taxes on GILTI. The Company had been pursuing relief from double taxation under the U.S.-Canada tax treaty for the years 2004 through 2013. During the fourth quarter of 2016, a tentative settlement was reached between the U.S. and Canada and, consequently, the Company established a net reserve of $24 million, including interest thereon, recorded as a $70 million cost and a $46 million benefit, or 3.2 percentage points, on the effective tax rate. In addition, as a result of the settlement, for the years 2014 through 2016, the Company had established a net reserve of $7 million, or 1.0 percentage points, on the effective tax rate in 2016. In the third quarter of 2017, the two countries finalized the agreement, which eliminated the double taxation, and the Company paid $63 million to the U.S. Internal Revenue Service to settle the liability. As a result of that agreement, the Company is entitled to a net tax benefit of $10 million primarily due to a foreign exchange loss deduction on its 2017 U.S. federal income tax return, or 1.3 percentage points, on the effective tax rate. The Company uses the U.S. dollar as the functional currency for its subsidiaries in Mexico. Because of the increase in the value of the Mexican peso versus the U.S. dollar in 2017, the Mexican tax provision includes decreased tax expense of approximately $4 million, or 0.5 percentage points, on the effective tax rate. In 2016 and 2015, a decline in value of the Mexican peso versus the U.S. dollar increased tax expense by $18 million and $17 million, or 2.4 percentage points and 2.9 percentage points on the effective tax rate, respectively. These impacts are largely associated with foreign currency translation gains and losses for local tax purposes on net U.S. dollar monetary assets held in Mexico for which there is no corresponding gain or loss in pre-tax income. During 2017, the Company increased the valuation allowance on the net deferred tax assets in Argentina. As a result, the Company recorded a valuation allowance in the amount of $16 million, or 2.0 percentage points on the effective tax rate, compared to $7 million and or 1.0 percentage points on the effective tax rate in 2016. During 2015, an audit was settled at a National Starch subsidiary related to a pre-acquisition period for which we are indemnified by Akzo Nobel N.V. (“Akzo”). In the third quarter of 2014, the Company recognized increased tax expense to reserve approximately $7 million ($5 million of tax and $2 million of interest) or 1.3 percentage points in the effective tax rate for the audit. In the third quarter of 2015 the reserve was reduced by approximately $4 million ($3 million of tax and $1 million of interest) which resulted in a decrease of 0.7 percentage points in the 2015 effective tax rate. These impacts are included in the rate reconciliation as “Other items, net.” The $7 million of tax expense and $4 million of reduced tax expense were recorded in the tax provision of the subsidiary, while the reimbursement from Akzo under the indemnity is recorded as other income, which results in no impact in net income for all periods. As of December 31, 2017, for U.S. tax purposes all of the undistributed earnings and profits of our foreign subsidiaries were deemed to be repatriated and subjected to a transition tax. In addition, during 2017 we recorded a provisional liability of $33 million for foreign withholding and state income taxes on certain unremitted earnings from foreign subsidiaries. However, we have not provided for foreign withholding taxes, state income taxes and federal and state taxes on foreign currency gains/losses on distributions of approximately $2.7 billion of unremitted earnings of our foreign subsidiaries; as such amounts are considered permanently reinvested. It is not practicable to estimate the additional income taxes, including applicable foreign withholding taxes that would be due upon the repatriation of these earnings. A reconciliation of the beginning and ending amounts of unrecognized tax benefits, excluding interest and penalties, for 2017 and 2016 is as follows: (in millions) 2017 2016 Balance at January 1 $ 86 $ 12 Additions for tax positions related to prior years — 72 Reductions for tax positions related to prior years — (9) Additions based on tax positions related to the current year 12 12 Settlements (58) — Reductions related to a lapse in the statute of limitations (1) (1) Balance at December 31 $ 39 $ 86 Of the $39 million of unrecognized tax benefits as of December 31, 2017, $15 million represents the amount that, if recognized, could affect the effective tax rate in future periods. The remaining $24 million includes an offset of $23 million for an income tax receivable and $1 million of federal benefit created as part of the U.S.-Canada tax settlement described previously. The Company accounts for interest and penalties related to income tax matters within the provision for income taxes. The Company has accrued $2 million of interest expense related to the unrecognized tax benefits as of December 31, 2017. The accrued interest expense was $9 million as of December 31, 2016. The Company is subject to U.S. federal income tax as well as income tax in multiple states and non-U.S. jurisdictions. The U.S. federal tax returns are subject to audit for the years 2014 to 2017. In general, the Company’s foreign subsidiaries remain subject to audit for years 2011 and later. It is also reasonably possible that the total amount of unrecognized tax benefits including interest and penalties will increase or decrease within 12 months of December 31, 2017. The Company has classified none of the unrecognized tax benefits as current because they are not expected to be resolved within the next 12 months. |
Benefit Plans
Benefit Plans | 12 Months Ended |
Dec. 31, 2017 | |
Net Periodic Pension and Postretirement Benefit Costs | |
Benefit plans | NOTE 10 – Benefit Plans The Company and its subsidiaries sponsor noncontributory defined benefit pension plans (qualified and non-qualified) covering a substantial portion of employees in the U.S. and Canada, and certain employees in other foreign countries. Plans for most salaried employees provide pay-related benefits based on years of service. Plans for hourly employees generally provide benefits based on flat dollar amounts and years of service. The Company’s general funding policy is to make contributions to the plans in amounts that comply with minimum funding requirements and are within the limits of deductibility under current tax regulations. Certain foreign countries allow income tax deductions without regard to contribution levels, and the Company’s policy in those countries is to make contributions required by the terms of the applicable plan. Included in the Company’s pension obligation are nonqualified supplemental retirement plans for certain key employees. Benefits provided under these plans are only partially funded, and payments to plan participants are made by the Company. The Company also provides healthcare and/or life insurance benefits for retired employees in the U.S., Canada, and Brazil. Healthcare benefits for retirees outside of the U.S., Canada, and Brazil are generally covered through local government plans. On December 31, 2016, the Company merged its existing U.S. qualified pension plans into the Ingredion Incorporated Cash Balance Plan for Salaried Employees. The Ingredion Incorporated Cash Balance Plan for Salaried Employees was renamed the Ingredion Pension Plan (“Combined Plan”). Certain U.S. salaried employees are covered by a component of the Combined Plan which provides benefits based on service credits to the participating employees’ accounts of between 3 percent and 10 percent of base salary, bonus, and overtime. On January 1, 2017, the Company amended this component of the Combined Plan to eliminate the service credit percentage increases and freeze them at the January 1, 2017, rate for eligible salaried employees. The amendment also impacted the nonqualified supplemental retirement plans. The plan amendment resulted in a reduction of the benefit obligation of $5 million as of December 31, 2016. The benefit will be recognized over the remaining life of the plan as a prior service cost benefit. In April 2016, the Company performed a pension remeasurement for one of its pension plans in Canada as a result of lump sum settlement payments made related to the Port Colborne plant sale. This plan settlement resulted in a reduction in the funded status of the Plan by $5 million. The Company recorded a pension charge of $1 million as a result of the settlement. Pension Obligation and Funded Status: The changes in pension benefit obligations and plan assets during 2017 and 2016, as well as the funded status and the amounts recognized in the Company’s Consolidated Balance Sheets related to the Company’s pension plans at December 31, 2017 and 2016, were as follows: U.S. Plans Non-U.S. Plans (in millions) 2017 2016 2017 2016 Benefit obligation At January 1 $ 367 $ 359 $ 223 $ 219 Service cost 6 6 3 3 Interest cost 13 14 11 10 Benefits paid (23) (16) (12) (15) Actuarial (gain) loss 30 10 7 6 Curtailment/settlement/amendments — (6) — (5) Foreign currency translation — — 16 5 Benefit obligation at December 31 $ 393 $ 367 $ 248 $ 223 Fair value of plan assets At January 1 $ 368 $ 354 $ 211 $ 206 Actual return on plan assets 59 20 17 11 Employer contributions — 10 5 7 Benefits paid (23) (16) (12) (15) Plan settlements — — — (5) Foreign currency translation — — 14 7 Fair value of plan assets at December 31 $ 404 $ 368 $ 235 $ 211 Funded status $ 11 $ 1 $ (13) $ (12) Amounts recognized in the Consolidated Balance Sheets as of December 31, 2017 and 2016 were as follows: U.S. Plans Non-U.S. Plans (in millions) 2017 2016 2017 2016 Non-current asset $ 23 $ 12 $ 37 $ 29 Current liabilities (2) (1) (1) (1) Non-current liabilities (10) (10) (49) (40) Net asset (liability) recognized $ 11 $ 1 $ (13) $ (12) Amounts recognized in accumulated other comprehensive loss, excluding tax effects, that have not yet been recognized as components of net periodic benefit cost at December 31, 2017 and 2016 were as follows: U.S. Plans Non-U.S. Plans (in millions) 2017 2016 2017 2016 Net actuarial loss $ 21 $ 28 $ 55 $ 52 Transition obligation — — 1 1 Prior service credit (6) (6) (1) (1) Net amount recognized $ 15 $ 22 $ 55 $ 52 The decrease in the net amount recognized in accumulated comprehensive loss at December 31, 2017, for the U.S. plans as compared to December 31, 2016, is mainly due to the actual return on assets being greater than the expected return on assets. This is partially offset by the effect of the decrease in discount rates used to measure the Company’s obligations under its U.S. pension plans. The increase in the net amount recognized in accumulated comprehensive loss at December 31, 2017, for the Non-U.S. plans, as compared to December 31, 2016, is largely due to the effect of the decrease in discount rates used to measure the Company’s obligations under its Non-U.S. pension plans. The accumulated benefit obligation for all defined benefit pension plans was $603 million and $555 million at December 31, 2017 and 2016, respectively. Information about plan obligations and assets for plans with an accumulated benefit obligation in excess of plan assets is as follows: U.S. Plans Non-U.S. Plans (in millions) 2017 2016 2017 2016 Projected benefit obligation $ 12 $ 11 $ 51 $ 43 Accumulated benefit obligation 11 10 41 36 Fair value of plan assets — — 2 2 Components of net periodic benefit cost consist of the following for the years ended December 31, 2017, 2016, and 2015: Year Ended December 31, U.S. Plans Non-U.S. Plans (in millions) 2017 2016 2015 2017 2016 2015 Service cost $ 6 $ 6 $ 8 $ 3 $ 3 $ 4 Interest cost 13 14 14 11 10 12 Expected return on plan assets (21) (20) (24) (10) (10) (13) Amortization of actuarial loss — 1 1 2 2 3 Amortization of prior service credit (1) — — — — — Settlement loss — — (1) — 1 — Net periodic benefit cost $ (3) $ 1 $ (2) $ 6 $ 6 $ 6 For the U.S. plans, the Company estimates that net periodic benefit cost for 2018 will include approximately $1 million relating to the amortization of the prior service credit included in accumulated other comprehensive loss as of December 31, 2017. For the non-U.S. plans, the Company estimates that net periodic benefit cost for 2018 will include approximately $2 million relating to the amortization of its accumulated actuarial loss. Actuarial gains and losses in excess of 10 percent of the greater of the projected benefit obligation or the market-related value of plan assets are recognized as a component of net periodic benefit cost over the average remaining service period of a plan’s active employees for active defined benefit pension plans and over the average remaining life of a plan’s active employees for frozen defined benefit pension plans. Total amounts recorded in other comprehensive income and net periodic benefit cost was as follows: (in millions, pre-tax) U.S. Plans Non-U.S. Plans 2017 2016 2015 2017 2016 2015 Net actuarial (gain) loss $ (7) $ 10 $ — $ (3) $ 6 $ (18) Prior service credit — (6) — — (1) — Amortization of actuarial loss — (1) (1) (2) (2) (3) Amortization of prior service credit 1 — — — — — Settlement gain — — 1 — — — Total recorded in other comprehensive income (6) 3 — (5) 3 (21) Net periodic benefit cost (3) 1 (2) 6 6 6 Total recorded in other comprehensive income and net periodic benefit cost $ (9) $ 4 $ (2) $ 1 $ 9 $ (15) The following weighted average assumptions were used to determine the Company’s obligations under the pension plans: U.S. Plans Non-U.S. Plans 2017 2016 2017 2016 Discount rate % % % % Rate of compensation increase The following weighted average assumptions were used to determine the Company’s net periodic benefit cost for the pension plans: U.S. Plans Non-U.S. Plans 2017 2016 2015 2017 2016 2015 Discount rate % % % % % % Expected long-term return on plan assets Rate of compensation increase For 2018 and 2017, the Company has assumed an expected long-term rate of return on assets of 5.30 percent and 5.75 percent for U.S. plans, respectively, and approximately 3.86 percent and 4.76 percent for Canadian plans, respectively. In developing the expected long-term rate of return assumption on plan assets, which consist mainly of U.S. and Canadian equity and debt securities, management evaluated historical rates of return achieved on plan assets and the asset allocation of the plans, input from the Company’s independent actuaries and investment consultants, and historical trends in long-term inflation rates. Projected return estimates made by such consultants are based upon broad equity and bond indices. The decrease in expected Non-U.S. plan long-term rates of return on assets compared to 2015 is due to the change in our investment approach and related asset allocation in the U.S. and Canada that occurred during 2016 to a liability-driven investment approach. As a result, a higher proportion of investments are in interest-sensitive investments (fixed income) as compared to the prior investment strategy for the U.S. and Canada pension plans. The discount rate reflects a rate of return on high-quality fixed income investments that match the duration of the expected benefit payments. The Company has typically used returns on long-term, high-quality corporate AA bonds as a benchmark in establishing this assumption. In 2016, the Company changed the method used to estimate the service and interest cost components of net periodic benefit cost for certain of our defined benefit pension and postretirement benefit plans. Historically, the Company estimated the service and interest cost components using a single weighted-average discount rate derived from the yield curve used to measure the benefit obligation at the beginning of the period. Beginning in 2016, the Company has elected to use a full yield curve approach in the estimation of these components of benefit cost by applying the specific spot rates along the yield curve used in the determination of the benefit obligation to the relevant projected cash flows. Plan Assets: The Company’s investment policy for its pension plans is to balance risk and return through diversified portfolios of fixed income securities, equity instruments, and short-term investments. Maturities for fixed income securities are managed such that sufficient liquidity exists to meet near-term benefit payment obligations. In 2016, the Company changed its investment approach for the U.S. and Canada plans due to the funded nature of the plans to a liability-driven investment approach. As a result, a higher proportion of investments are in interest rate-sensitive investments (fixed income) as compared to the prior investment strategy. For U.S. pension plans, the weighted average target range allocation of assets was 20-40 percent in equities, 57-79 percent in fixed income and 1-3 percent in cash and other short-term investments. The asset allocation is reviewed regularly and portfolio investments are rebalanced to the targeted allocation when considered appropriate. The Company’s weighted average asset allocation as of December 31, 2017 and 2016 for U.S. and non-U.S. pension plan assets is as follows: U.S. Plans Non-U.S. Plans Asset Category 2017 2016 2017 2016 Equity securities % % % % Debt securities Cash and other Total % % % % The fair values of the Company’s plan assets by asset category and level in the fair value hierarchy are as follows: Fair Value Measurements at December 31, 2017 (in millions) Level 1 Level 2 Level 3 Total U.S. Plans: Equity index: U.S. ( a ) $ — $ 51 $ — $ 51 International ( b ) — 55 — 55 Fixed income index: Long bond ( c ) — 273 — 273 Long government bond ( d ) — 21 — 21 Cash ( e ) — 4 — 4 Total U.S. Plans $ — $ 404 $ — $ 404 Non-U.S. Plans: Equity index: U.S. ( a ) $ — $ 12 $ — $ 12 Canada ( f ) — 22 — 22 International ( b ) — 52 — 52 Real estate ( g ) — 5 — 5 Fixed income index: Intermediate bond (h) — 25 — 25 Long bond ( i ) — 84 — 84 Other (j) — 24 — 24 Cash ( e ) 2 9 — 11 Total Non-U.S. Plans $ 2 $ 233 $ — $ 235 Fair Value Measurements at December 31, 2016 (in millions) Level 1 Level 2 Level 3 Total U.S. Plans: Equity index: U.S. ( a ) $ — $ 70 $ — $ 70 International ( b ) — 68 — 68 Fixed income index: Long bond ( c ) — 227 — 227 Cash ( e ) — 3 — 3 Total U.S. Plans $ — $ 368 $ — $ 368 Non-U.S. Plans: Equity index: U.S. ( a ) $ — $ 11 $ — $ 11 Canada ( f ) — 21 — 21 International ( b ) — 49 — 49 Real estate ( g) — 5 — 5 Fixed income index: Intermediate bond (h) — 21 — 21 Long bond ( i ) — 72 — 72 Other (j) — 23 — 23 Cash ( e ) 1 8 — 9 Total Non-U.S. Plans $ 1 $ 210 $ — $ 211 (a) This category consists of both passively and actively managed equity index funds that track the return of large capitalization U.S. equities. (b) This category consists of both passively and actively managed equity index funds that track an index of returns on international developed market equities as well as infrastructure assets. (c) This category consists of an actively managed fixed income index fund that invests in a diversified portfolio of fixed-income corporate securities with maturities generally exceeding 10 years. (d) This category consists of an actively managed fixed income index fund that invests in a diversified portfolio of fixed-income U.S. treasury securities with maturities generally exceeding 10 years. (e) This category represents cash or cash equivalents. (f) This category consists of an actively managed equity index fund that tracks against an index of large capitalization Canadian equities. (g) This category consists of an actively managed equity index fund that tracks against real estate investment trusts and real estate operating companies. (h) This category consists of both passively and actively managed fixed income index funds that track the return of intermediate duration government and investment grade corporate bonds. (i) This category consists of both passively and actively managed fixed income index funds that track the return of Canada government bonds, investment grade corporate bonds and hedge funds. (j) This category mainly consists of investment products provided by an insurance company that offers returns that are subject to a minimum guarantee and mutual funds. All significant pension plan assets are held in collective trusts by the Company’s U.S. and non-U.S. plans. The fair values of shares of collective trusts are based upon the net asset values of the funds reported by the fund managers based on quoted market prices of the underlying securities as of the balance sheet date and are considered to be Level 2 fair value measurements. This may produce a fair value measurement that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Company believes its valuation methods are appropriate and consistent with those of other market participants, the use of different methodologies could result in different fair value measurements at the reporting date. In 2017, the Company made cash contributions of $5 million to its non-U.S. pension plans. The Company anticipates that in 2018 it will make cash contributions of $2 million and $3 million to its U.S. and non-U.S. pension plans, respectively. Cash contributions in subsequent years will depend on a number of factors including the performance of plan assets. The following benefit payments, which reflect anticipated future service, as appropriate, are expected to be made: (in millions) U.S. Plans Non-U.S. Plans 2018 $ 21 $ 11 2019 20 12 2020 21 12 2021 22 12 2022 23 12 Years 2023 - 2027 124 70 The Company and certain subsidiaries also maintain defined contribution plans. The Company makes matching contributions to these plans that are subject to certain vesting requirements and are based on a percentage of employee contributions. Amounts charged to expense for defined contribution plans totaled $22 million, $20 million, and $17 million in 2017, 2016, and 2015, respectively. Postretirement Benefit Plans: The Company’s postretirement benefit plans currently are not funded. The information presented below includes plans in the U.S., Brazil, and Canada. The changes in the benefit obligations of the plans during 2017 and 2016, and the amounts recognized in the Company’s Consolidated Balance Sheets at December 31, 2017 and 2016, are as follows: (in millions) 2017 2016 Accumulated postretirement benefit obligation At January 1 $ 67 $ 64 Service cost 1 1 Interest cost 3 2 Employee contributions 1 — Actuarial loss 2 2 Benefits paid (4) (4) Foreign currency translation — 2 At December 31 70 67 Fair value of plan assets — — Funded status $ (70) $ (67) Amounts recognized in the Consolidated Balance Sheets consist of: (in millions) 2017 2016 Current liabilities $ (4) $ (4) Non-current liabilities (66) (63) Net liability recognized $ (70) $ (67) Amounts recognized in accumulated other comprehensive loss (income), excluding tax effects, that have not yet been recognized as components of net periodic benefit cost at December 31, 2017 and 2016 were as follows: (in millions) 2017 2016 Net actuarial loss $ 11 $ 7 Prior service credit (8) Net amount recognized $ 5 $ (1) Components of net periodic benefit cost consisted of the following for the years ended December 31, 2017, 2016, and 2015: Year Ended December 31, (in millions) 2017 2016 2015 Service cost $ 1 $ 1 $ 1 Interest cost 3 2 3 Amortization of prior service credit (3) (2) (2) Net periodic benefit cost $ 1 $ 1 $ 2 The Company estimates that postretirement benefit expense for these plans for 2018 will include approximately $2 million relating to the amortization of the prior service credit included in accumulated other comprehensive income as of December 31, 2017. Total amounts recorded in other comprehensive income and net periodic benefit cost was as follows: (in millions, pre-tax) 2017 2016 2015 Net actuarial loss (gain) $ 2 $ 2 $ (2) Amortization of prior service credit 3 2 2 New prior service credit — — 2 Total recorded in other comprehensive income 5 4 2 Net periodic benefit cost 1 1 2 Total recorded in other comprehensive income and net periodic benefit cost $ 6 $ 5 $ 4 The following weighted average assumptions were used to determine the Company’s obligations under the postretirement plans: 2017 2016 Discount rate % % The following weighted average assumptions were used to determine the Company’s net postretirement benefit cost: 2017 2016 2015 Discount rate % % % The discount rate reflects a rate of return on high-quality fixed-income investments that match the duration of expected benefit payments. The Company has typically used returns on long-term, high-quality corporate AA bonds as a benchmark in establishing this assumption. The healthcare cost trend rates used in valuing the Company’s postretirement benefit obligations are established based upon actual healthcare trends and consultation with actuaries and benefit providers. The following assumptions were used as of December 31, 2017: U.S. Canada Brazil 2017 increase in per capita cost % % % Ultimate trend % % % Year ultimate trend reached The sensitivities of service cost and interest cost and year-end benefit obligations to changes in healthcare cost trend rates for the postretirement benefit plans as of December 31, 2017, are as follows: (in millions) 2017 One-percentage point increase in trend rates: - Increase in service cost and interest cost components $ 1 - Increase in year-end benefit obligations 7 One-percentage point decrease in trend rates: - Decrease in service cost and interest cost components 1 - Decrease in year-end benefit obligations 6 The following benefit payments, which reflect anticipated future service, as appropriate, are expected to be made under the Company’s postretirement benefit plans: (in millions) 2018 $ 4 2019 4 2020 4 2021 4 2022 5 Years 2023 - 2027 24 Multi-employer Plans: The Company participates in and contributes to one multi-employer benefit plan under the terms of collective bargaining agreements that cover certain union-represented employees and retirees in the U.S. The plan covers medical and dental benefits for active hourly employees and retirees represented by the U.S. Steel Workers Union for certain U.S. locations. The risks of participating in this multi-employer plan are different from single-employer plans. This plan receives contributions from two or more unrelated employers pursuant to one or more collective bargaining agreements and the assets contributed by one employer may be used to fund the benefits of all employees covered within the plan. The Company is required to make contributions to this plan as determined by the terms and conditions of the collective bargaining agreements and plan terms. For the years ended December 31, 2017, 2016, and 2015, the Company made regular contributions of $13 million, $14 million, and $12 million, respectively, to this multi-employer plan. The Company cannot currently estimate the amount of multi-employer plan contributions that will be required in 2018 and future years, but these contributions could increase due to healthcare cost trends. The collective bargaining agreements associated with this plan expire during 2018 - 2021. |
Supplementary Information
Supplementary Information | 12 Months Ended |
Dec. 31, 2017 | |
Supplementary Information | |
Supplementary Information | NOTE 11 – Supplementary Information Consolidated Balance Sheets (in millions) 2017 2016 Accounts receivable, net: Accounts receivable — trade $ 760 $ 751 Accounts receivable — other 209 178 Allowance for doubtful accounts (8) (6) Total accounts receivable, net 961 923 Inventories: Finished and in process 495 478 Raw materials 278 260 Manufacturing supplies 50 51 Total inventories 823 789 Accrued liabilities: Compensation-related costs 101 107 Income taxes payable 22 40 Unrecognized tax benefits — 72 Dividends payable 44 36 Accrued interest 15 19 Taxes payable other than income taxes 37 36 Other 125 122 Total accrued liabilities 344 432 Non-current liabilities: Employees’ pension, indemnity, and postretirement 121 109 Other 106 49 Total non-current liabilities $ 227 $ 158 Consolidated Statements of Income (in millions) 2017 2016 2015 Other income, net: Insurance settlement $ 9 $ — $ — Value-added tax recovery 6 5 4 Gain from sale of plant — — 10 Legal settlement — — (7) Income tax indemnification expense (a) — — (4) Other 3 (1) (2) Other income, net $ $ $ (a) Amount fully offset by $4 million of benefit recorded in the income tax provision for 2015. (in millions) 2017 2016 2015 Financing costs, net: Interest expense, net of amounts capitalized (a) $ 79 $ 73 $ 69 Interest income (11) (10) (14) Foreign currency transaction losses 5 3 6 Financing costs, net $ $ $ (a) Interest capitalized amounted to $4 million, $4 million, and $2 million in 2017, 2016 and 2015, respectively. Consolidated Statements of Cash Flow (in millions) 2017 2016 2015 Other non-cash charges to net income: Share-based compensation expense $ 26 $ 28 $ 21 Other 13 16 18 Total other non-cash charges to net income $ 39 $ 44 $ 39 (in millions) 2017 2016 2015 Interest paid $ 77 $ 59 $ 52 Income taxes paid 289 254 158 |
Equity
Equity | 12 Months Ended |
Dec. 31, 2017 | |
Equity | |
Equity | NOTE 12 – Equity Preferred stock: The Company has authorized 25 million shares of $0.01 par value preferred stock, none of which were issued or outstanding at December 31, 2017 and 2016. Treasury stock: On December 12, 2014, the Board of Directors authorized a new stock repurchase program permitting the Company to purchase up to 5 million of its outstanding common shares from January 1, 2015, through December 12, 2019. The Company’s previously authorized stock repurchase program permitting the purchase of up to 4 million shares has been fully utilized. The parameters of the Company’s stock repurchase program are not established solely with reference to the dilutive impact of shares issued under the Company’s stock incentive plan. However, the Company expects that, over time, share repurchases will offset the dilutive impact of shares issued under the stock incentive plan. In 2017, the Company repurchased 1 million common shares in open market transactions at a cost of $123 million. In 2016, the Company had no repurchases of common shares in open market transactions. Set forth below is a reconciliation of common stock share activity for the years ended December 31, 2017, 2016, and 2015: (Shares of common stock, in thousands) Issued Held in Treasury Outstanding Balance at December 31, 2014 77,811 6,489 71,322 Issuance of restricted stock units as compensation — (102) 102 Performance shares and other share-based awards — (75) 75 Stock options exercised — (556) 556 Purchase/acquisition of treasury stock — 439 (439) Balance at December 31, 2015 77,811 6,195 71,616 Issuance of restricted stock units as compensation — (94) 94 Performance shares and other share-based awards — (70) 70 Stock options exercised — (636) 636 Purchase/acquisition of treasury stock — 2 (2) Balance at December 31, 2016 77,811 5,397 72,414 Issuance of restricted stock units as compensation — (103) 103 Performance shares and other share-based awards — (75) 75 Stock options exercised — (443) 443 Purchase/acquisition of treasury stock — 1,039 (1,039) Balance at December 31, 2017 77,811 5,815 71,996 Share-based payments : The following table summarizes the components of the Company’s share-based compensation expense for the last three years: (in millions) 2017 2016 2015 Stock options: Pre-tax compensation expense $ 7 $ 9 $ 7 Income tax benefit (2) (3) (3) Stock option expense, net of income taxes 5 6 4 RSUs: Pre-tax compensation expense 13 12 9 Income tax benefit (4) (5) (3) RSUs, net of income taxes 9 7 6 Performance shares and other share-based awards: Pre-tax compensation expense 6 7 5 Income tax benefit (2) (3) (2) Performance shares and other share-based compensation expense, net of income taxes 4 4 3 Total share-based compensation: Pre-tax compensation expense 26 28 21 Income tax benefit (8) (11) (8) Total share-based compensation expense, net of income taxes $ 18 $ 17 $ 13 The Company has a stock incentive plan (“SIP”) administered by the compensation committee of its Board of Directors that provides for the granting of stock options, restricted stock, restricted stock units, and other share-based awards to certain key employees. A maximum of 8 million shares were originally authorized for awards under the SIP. As of December 31, 2017, 3.7 million shares were available for future grants under the SIP. Shares covered by awards that expire, terminate or lapse will again be available for the grant of awards under the SIP. Stock Options: Under the Company’s SIP, stock options are granted at exercise prices that equal the market value of the underlying common stock on the date of grant. The options have a 10-year term and are exercisable upon vesting, which occurs over a three-year period at the anniversary dates of the date of grant. Compensation expense is generally recognized on a straight-line basis for all awards over the employee’s vesting period or over a one-year required service period for certain retirement eligible executive level employees. The Company estimates a forfeiture rate at the time of grant and updates the estimate throughout the vesting of the stock options within the amount of compensation costs recognized in each period. The Company granted non-qualified options to purchase 278 thousand shares and 329 thousand shares for the years ended December 31, 2017 and 2016, respectively. The fair value of each option grant was estimated using the Black-Scholes option-pricing model with the following assumptions: For the Year Ended December 31, 2017 2016 2015 Expected life (in years) 5.5 5.5 5.5 Risk-free interest rate % % % Expected volatility % % % Expected dividend yield % % % The expected life of options represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and the Company’s historical exercise patterns. The risk-free interest rate is based on the 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 based on current dividend payments. A summary of stock option transactions for the year 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 Granted 278 117.65 Exercised (443) 46.16 Cancelled (21) 87.50 Outstanding as of December 31, 2017 2,095 $ 71.81 5.87 $ 142 Exercisable as of December 31, 2017 1,527 $ 59.14 5.24 $ 123 For the years ended December 31, 2017, 2016, and 2015, cash received from the exercise of stock options was $20 million, $29 million, and $21 million, respectively. As of December 31, 2017, the unrecognized compensation cost related to non-vested stock options totaled $3 million, which is expected to be amortized over the weighted-average period of approximately 1.5 years. Additional information pertaining to stock option activity is as follows: Year Ended December 31, (dollars in millions, except per share) 2017 2016 2015 Weighted average grant date fair value of stock options granted (per share) $ 23.90 $ 18.73 $ 16.04 Total intrinsic value of stock options exercised 35 46 27 Restricted Stock Units: The Company has granted restricted stock units (“RSUs”) to certain key employees. The RSUs are subject to cliff vesting, generally after three years provided the employee remains in the service of the Company. Compensation expense is generally recognized on a straight-line basis for all awards over the employee’s vesting period or over a one-year required service period for certain retirement eligible executive level employees. The Company estimates a forfeiture rate at the time of grant and updates the estimate throughout the vesting 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 at the date of the grant. The following table summarizes RSU activity for the year: Weighted Number of Average Restricted Fair Value (shares in thousands) Shares per Share Non-vested at December 31, 2016 429 $ 81.04 Granted 125 119.54 Vested (148) 65.03 Cancelled (19) 95.17 Non-vested at December 31, 2017 387 $ 100.13 The total fair value of RSUs that vested in 2017, 2016, and 2015 was $18 million, $15 million, and $13 million, respectively. At December 31, 2017, the total remaining unrecognized compensation cost related to RSUs was $13 million which will be amortized on a weighted-average basis over approximately 1.7 years. Recognized compensation cost related to unvested RSUs is included in share-based payments subject to redemption in the Consolidated Balance Sheets and totaled $25 million and $21 million at December 31, 2017 and 2016, respectively. Performance Shares: The Company has a long-term incentive plan for senior management in the form of performance shares. The ultimate payments for performance shares awarded and vested will be based solely on the Company’s stock performance as compared to the stock performance of its peer group. The number of shares that ultimately vest can range from zero to 200 percent of the awarded grant depending on the Company’s stock performance as compared to the stock performance of the peer group. The share award vesting will be calculated at the end of the three-year period and are subject to approval by management and the Compensation Committee. Compensation expense is based on the fair value of the performance shares at the grant date, established using a Monte Carlo simulation model. The total compensation expense for these awards is amortized over a three-year graded vesting schedule. The Company awarded 38 thousand, 44 thousand, and 47 thousand performance shares in 2017, 2016, and 2015, respectively. The weighted average fair value of the shares granted during 2017, 2016, and 2015 was $114.08, $131.34, and $77.54, respectively. The 2014 performance share award vested in February 2017, achieving a 200 percent pay out of the grant, or 115 thousand total vested shares. As of December 31, 2017, the performance awards granted in 2017, 2016, and 2015 are estimated to pay out at 127 percent, 175 percent, and 200 percent, respectively. There were three thousand shares cancelled during the year ended December 31, 2017. As of December 31, 2017, the unrecognized compensation cost relating to these plans was $3 million, which will be amortized over the remaining requisite service periods of 1.7 years. Recognized compensation cost related to these unvested awards is included in share-based payments subject to redemption in the Consolidated Balance Sheets and totaled $11 million and $9 million at December 31, 2017 and 2016, respectively. Other share-based awards under the SIP: Under the compensation agreement with the Board of Directors, $110,000 of a director’s annual retainer and 50 percent of the additional retainers paid to the Lead Director and the Chairmen of committees of the Board of Directors are awarded in shares of common stock or restricted units based on each director’s elections to receive his or her compensation or a portion thereof in the form of restricted units. These restricted units vest immediately, and the director is allowed to either receive these shares immediately or defer them. Deferred shares cannot be transferred until a date not less than six months after the director’s termination of service from the board at which time the restricted units will be settled by delivering shares of common stock. The compensation expense relating to this plan included in the Consolidated Statements of Income was approximately $1 million in 2017, 2016, and 2015. At December 31, 2017, there were approximately 182 thousand restricted units outstanding under this plan at a carrying value of approximately $11 million. Accumulated Other Comprehensive Loss: A summary of accumulated other comprehensive income (loss) for the years ended December 31, 2015, 2016 and 2017 is presented below: Deferred Unrealized Accumulated Cumulative (Loss) Gain Pension and (Loss) Other Translation on Hedging Postretirement Gain on Comprehensive (in millions) Adjustment Activities Adjustment Investment (Loss) Gain Balance, December 31, 2014 $ (701) $ (19) $ (61) $ (1) $ (782) Other comprehensive (loss) income before reclassification adjustments (324) (61) 18 — (367) Amount reclassified from accumulated OCI — 46 1 — 47 Tax benefit (provision) — 5 (5) — — Net other comprehensive (loss) income (324) (10) 14 — (320) Balance, December 31, 2015 (1,025) (29) (47) (1) (1,102) Other comprehensive income (loss) before reclassification adjustments 17 (17) (14) 1 (13) Amount reclassified from accumulated OCI — 49 1 — 50 Tax (provision) benefit — (10) 4 — (6) Net other comprehensive income (loss) 17 22 (9) 1 31 Balance, December 31, 2016 (1,008) (7) (56) — (1,071) Other comprehensive income (loss) before reclassification adjustments 57 (16) 8 3 52 Amount reclassified from accumulated OCI — 6 (2) — 4 Tax benefit (provision) — 4 (1) (1) 2 Net other comprehensive income (loss) 57 (6) 5 2 58 Balance, December 31, 2017 $ (951) $ (13) $ (51) $ 2 $ (1,013) The following table provides detail pertaining to reclassifications from AOCI into net income for the periods presented: Affected Line Item in Amount Reclassified from AOCI Consolidated (in millions) 2017 2016 2015 Statements of Income Gains (losses) on cash flow hedges: Commodity contracts $ (5) $ (45) $ (43) Cost of sales Foreign currency contracts 1 (2) — Net sales/Cost of sales Interest rate contracts (2) (2) (3) Financing costs, net Gains (losses) related to pension and other postretirement obligations 2 (1) (1) (a) Total before-tax reclassifications (4) (50) (47) Tax benefit 1 16 14 Total after-tax reclassifications $ (3) $ (34) $ (33) (a) This component is included in the computation of net periodic benefit cost and affects both cost of sales and operating expenses on the Consolidated Statements of Income. The following table provides the computation of basic and diluted earnings per common share (“EPS”) for the periods presented. Year ended December 31, 2017 2016 2015 Net Income Weighted Per Net Income Weighted Per Net Income Weighted Per Available Average Share Available Average Share Available Average Share (in millions, except per share amounts) to Ingredion Shares Amount to Ingredion Shares Amount to Ingredion Shares Amount Basic EPS $ 519 72.0 $ 7.21 $ 485 72.3 $ 6.70 $ 402 71.6 $ 5.62 Effect of Dilutive Securities: Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards 1.5 1.8 1.4 Diluted EPS $ 519 73.5 $ 7.06 $ 485 74.1 $ 6.55 $ 402 73.0 $ 5.51 |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2017 | |
Segment Information | |
Segment Information | NOTE 13 – Segment Information The Company is principally engaged in the production and sale of starches and sweeteners for a wide range of industries, and is managed geographically on a regional basis. The Company’s operations are classified into four reportable business segments: North America, South America, Asia Pacific, and Europe, Middle East, and Africa (“EMEA”). Its North America segment includes businesses in the U.S., Canada, and Mexico. The Company’s South America segment includes businesses in Brazil, Colombia, Ecuador, and the Southern Cone of South America, which includes Argentina, Chile, Peru, and Uruguay. Its Asia Pacific segment includes businesses in South Korea, Thailand, Malaysia, China, Japan, Indonesia, the Philippines, Singapore, India, Australia, and New Zealand. The Company’s EMEA segment includes businesses in the United Kingdom, Germany, South Africa, Pakistan, and Kenya. 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. (in millions) 2017 2016 2015 Net sales to unaffiliated customers: North America $ 3,529 $ 3,447 $ 3,345 South America 1,007 1,010 1,013 Asia Pacific 740 709 733 EMEA 556 538 530 Total $ 5,832 $ 5,704 $ 5,621 Operating income: North America $ 661 $ 610 $ 479 South America 80 89 101 Asia Pacific 112 111 107 EMEA 113 106 93 Corporate (a) (82) (86) (75) Subtotal 884 830 705 Restructuring/impairment charges (b) (38) (19) (28) Acquisition/integration costs (4) (3) (10) Charge for fair value markup of acquired inventory (9) — (10) Insurance settlement 9 — — Litigation settlement — — (7) Gain from land sale — — 10 Total operating income 842 808 660 Financing costs, net 73 66 61 Income before income taxes $ 769 $ 742 $ 599 (a) For 2015, includes $4 million of expense relating to a tax indemnification agreement with offsetting income of $4 million recorded in the provision for income taxes (see Note 9). (b) For 2017, includes $17 million of employee-related severance and other costs associated with the restructuring in Argentina, $13 million of restructuring of related to our leaf extraction process in Brazil, $6 million of employee-related severance and other costs associated with the Finance Transformation initiative, and $2 million of other restructuring charges including employee-related severance costs in North America and a refinement of estimates for prior year restructuring activities. For 2016, includes $11 million of employee-related severance and other costs associated with the execution of IT outsourcing contracts, $6 million of employee-related severance costs associated with our optimization initiative in North America and South America, and $2 million of costs attributable to the Port Colborne plant sale. For 2015, includes $12 million of charges for impaired assets and restructuring costs in Brazil, $12 million of restructuring costs associated with the Penford acquisition, and $4 million of restructuring costs in Canada. As of December 31, (in millions) 2017 2016 Total assets: North America (a) $ 3,967 $ 3,796 South America 812 809 Asia Pacific 774 697 EMEA 527 480 Total $ 6,080 $ 5,782 (a) For purposes of presentation, North America includes Corporate assets. (in millions) 2017 2016 2015 Depreciation and amortization: North America (a) $ 140 $ 130 $ 123 South America 27 26 30 Asia Pacific 25 23 23 EMEA 17 17 18 Total $ 209 $ 196 $ 194 Mechanical stores expense (b) : North America (a) $ 37 $ 37 $ 36 South America 12 12 13 Asia Pacific 5 5 5 EMEA 3 3 3 Total $ 57 $ 57 $ 57 Capital expenditures and mechanical stores purchases: North America (a) $ 180 $ 167 $ 158 South America 50 56 61 Asia Pacific 51 41 36 EMEA 33 20 25 Total $ 314 $ 284 $ 280 (a) For purposes of presentation, North America includes Corporate activities of depreciation, amortization, capital expenditures, and mechanical stores purchase, respectively. (a) Represents spare parts used in the production process. Such spare parts are recorded in PP&E as part of machinery and equipment until they are utilized in the manufacturing process and expensed as a period cost. The following table presents net sales to unaffiliated customers by country of origin for the last three years: Net Sales (in millions) 2017 2016 2015 U.S. $ 2,191 $ 2,117 $ 1,983 Mexico 952 955 945 Brazil 519 522 452 Canada 385 375 417 Korea 275 266 276 Others 1,510 1,469 1,548 Total $ 5,832 $ 5,704 $ 5,621 The following table presents long-lived assets (excluding intangible assets and deferred income taxes) by country at December 31: Long-lived Assets (in millions) 2017 2016 U.S. $ 977 $ 955 Mexico 306 303 Brazil 235 245 Canada 179 147 Thailand 137 119 Germany 133 106 Korea 109 84 Others 284 278 Total $ 2,360 $ 2,237 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies | |
Commitments and Contingencies | NOTE 14 – Commitments and Contingencies The Company is a party to a large number of labor claims relating to our Brazilian operations. The Company has reserved an aggregate of approximately $5 million as of December 31, 2017, in respect of these claims. These labor claims primarily relate to dismissals, severance, health and safety, work schedules, and salary adjustments. The Company is currently subject to various other claims and suits arising in the ordinary course of business, including certain environmental proceedings and other commercial claims. The Company also routinely receives inquiries from regulators and other government authorities relating to various aspects of its business, including with respect to compliance with laws and regulations relating to the environment, and at any given time, the Company has matters at various stages of resolution with the applicable governmental authorities. The outcomes of these matters are not within the Company’s complete control and may not be known for prolonged periods of time. The Company does not believe that the results of currently known legal proceedings and inquires, even if unfavorable to the Company, will be material to the Company. There can be no assurance, however, that such claims, suits or investigations or those arising in the future, whether taken individually or in the aggregate, will not have a material adverse effect on the Company’s financial condition or results of operations. |
Quarterly Financial Data (Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Data (Unaudited) | |
Quarterly Financial Data (Unaudited) | Quarterl Summarized quarterly financial data is as follows: (in millions, except per share amounts) 1 st QTR (a) 2 nd QTR (b) 3 rd QTR (c) 4 th QTR (d) 2017 Net sales before shipping and handling costs $ 1,537 $ 1,542 $ 1,574 $ 1,527 Less: shipping and handling costs 84 85 89 90 Net sales 1,453 1,457 1,485 1,437 Gross profit 352 373 388 360 Net income attributable to Ingredion 124 130 166 Basic earnings per common share of Ingredion 1.72 1.81 2.31 1.37 Diluted earnings per common share of Ingredion 1.68 1.78 2.26 1.35 Per share dividends declared $ 0.50 $ 0.50 $ 0.60 $ 0.60 (in millions, except per share amounts) 1 st QTR (e) 2 nd QTR (f) 3 rd QTR (g) 4 th QTR (h) 2016 Net sales before shipping and handling costs $ 1,434 $ 1,533 $ 1,569 $ 1,484 Less: shipping and handling costs 74 78 80 85 Net sales 1,360 1,455 1,489 1,399 Gross profit 339 355 369 339 Net income attributable to Ingredion 130 117 143 94 Basic earnings per common share of Ingredion 1.81 1.62 1.98 1.29 Diluted earnings per common share of Ingredion 1.77 1.58 1.93 1.26 Per share dividends declared $ 0.45 $ 0.45 $ 0.50 $ 0.50 (a) In the first quarter of 2017, the Company recorded $11 million in after-tax, net restructuring costs, $3 million in after-tax non-cash inventory charges related to the TIC acquisition, and $1 million in after-tax acquisition and integration costs. (b) In the second quarter of 2017, the Company recorded $5 million in after-tax, net restructuring costs and $3 million in after-tax, non-cash inventory charges. (c) In the third quarter of 2017, the Company recorded a $10 million gain related to an income tax settlement, $5 million in after-tax, net restructuring costs, and $1 million in after-tax acquisition and integration costs. (d) In the fourth quarter of 2017, the Company recorded a $23 million after-tax charge related to the enactment of the TCJA, $10 million in after-tax, net restructuring costs, a $6 million after-tax gain related to insurance settlement, and $1 million in after-tax acquisition and integration costs. (e) In the first quarter of 2016, the Company recorded $1 million in after-tax acquisition and integration costs. (f) In the second quarter of 2016, the Company recorded $10 million in after-tax, net restructuring costs. (g) In the third quarter of 2016, the Company recorded $2 million in after-tax, net restructuring costs. (h) In the fourth quarter of 2016, the Company recorded a $27 million charge related to an income tax settlement, $2 million in after-tax, net restructuring charges, and $1 million in after-tax acquisition and integration costs. |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies | |
Basis of presentation | Basis of presentation : The consolidated financial statements consist of the accounts of the Company, including all significant subsidiaries. Intercompany accounts and transactions are eliminated in consolidation. The preparation of the accompanying consolidated financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions about future events. These estimates and the underlying assumptions affect the amounts of assets and liabilities reported, disclosures about contingent assets and liabilities, and reported amounts of revenues and expenses. Such estimates include the value of purchase consideration, valuation of accounts receivable, inventories, goodwill, intangible assets and other long-lived assets, legal contingencies, guarantee obligations, and assumptions used in the calculation of income taxes, and pension and other postretirement benefits, among others. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management will adjust such estimates and assumptions when facts and circumstances dictate. Foreign currency devaluations, corn price volatility, access to difficult credit markets, and adverse changes in the global economic environment have combined to increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in these estimates will be reflected in the financial statements in future periods. Assets and liabilities of foreign subsidiaries, other than those whose functional currency is the U.S. dollar, are translated at current exchange rates with the related translation adjustments reported in equity as a component of accumulated other comprehensive income (loss). The U.S. dollar is the functional currency for the Company’s Mexican subsidiary. Income statement accounts are translated at the average exchange rate during the period. However, significant non-recurring items related to a specific event are recognized at the exchange rate on the date of the significant event. For foreign subsidiaries where the U.S. dollar is the functional currency, monetary assets and liabilities are translated at current exchange rates with the related adjustment included in net income. Non-monetary assets and liabilities are translated at historical exchange rates. Although the Company hedges the predominance of its transactional foreign exchange risk (see Note 6), the Company incurs foreign currency transaction gains and losses relating to assets and liabilities that are denominated in a currency other than the functional currency. For 2017, 2016, and 2015, the Company incurred foreign currency transaction net losses of $5 million, $3 million, and $6 million, respectively. The Company’s accumulated other comprehensive loss included in equity on the Consolidated Balance Sheets includes cumulative translation losses of approximately $1 billion at both December 31, 2017 and 2016. |
Cash and cash equivalents | Cash and cash equivalents: Cash equivalents consist of all instruments purchased with an original maturity of three months or less, and which have virtually no risk of loss in value. |
Accounts receivable, net | Accounts receivable, net : Accounts receivable, net, consist of trade and other receivables carried at approximate fair value, net of an allowance for doubtful accounts based on specific identification of material amounts at risk and a general reserve based on historical collection experience. |
Inventories | Inventories: Inventories are stated at the lower of cost or net realizable value. Costs are predominantly determined using the weighted average method. |
Investments | Investments: Investments in the common stock of affiliated companies over which the Company does not exercise significant influence are accounted for under the cost method. In 2016, the Company invested in SweeGen Inc., which it accounts for under the cost method and which had a carrying value of $2 million as of both December 31, 2017 and 2016. Investments that enable the Company to exercise significant influence, but do not represent a controlling interest, are accounted for under the equity method; such investments are carried at cost, adjusted to reflect the Company’s proportionate share of income or loss, less dividends received. The Company did not have any investments accounted for under the equity method at December 31, 2017, or 2016. The Company has equity interests in the CME Group Inc. and CBOE Holdings, Inc., which are classified as available for sale securities. The investments are carried at fair value with unrealized gains and losses recorded to other comprehensive income. The Company would recognize a loss on its investments when there is a loss in value of an investment that is other than temporary. Investments are included in other assets in the Consolidated Balance Sheets and are not significant. |
Leases | Leases: The Company leases rail cars, certain machinery and equipment, and office space. The Company classifies its leases as either capital or operating based on the terms of the related lease agreement and the criteria contained in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 840, Leases, and related interpretations. |
Property, plant and equipment and depreciation | Property, plant and equipment and depreciation: Property, plant and equipment (“PP&E”) are stated at cost less accumulated depreciation. Depreciation is generally computed on the straight-line method over the estimated useful lives of depreciable assets, which range from 25 to 50 years for buildings and from two to 25 years for all other assets. Where permitted by law, accelerated depreciation methods are used for tax purposes. The Company recognized depreciation expense of $179 million, $171 million, and $172 million for the years ended December 31, 2017, 2016, and 2015, respectively. The Company reviews the recoverability of the net book value of PP&E for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable from estimated future cash flows expected to result from its use and eventual disposition. If this review indicates that the carrying values will not be recovered, the carrying values would be reduced to fair value and an impairment loss would be recognized. As required under accounting principles generally accepted in the U.S., the impairment analysis for long-lived assets occurs before the goodwill impairment assessment described below. |
Goodwill and other intangible assets | Goodwill and other intangible assets: Goodwill ($803 million and $784 million at December 31, 2017 and 2016, respectively) represents the excess of the cost of an acquired entity over the fair value assigned to identifiable assets acquired and liabilities assumed. The Company also has other intangible assets of $493 million and $502 million at December 31, 2017 and 2016, respectively. The carrying value of goodwill by reportable business segment at December 31, 2017 and 2016 was as follows: North South Asia (in millions) America America Pacific EMEA Total Balance at December 31, 2015 $ 424 $ 22 $ 86 $ 69 $ 601 Acquisitions 186 — — — 186 Currency translation — 4 (1) (6) (3) Balance at December 31, 2016 610 26 85 63 784 Acquisitions (10) (a) — 15 — 5 Currency translation — — 7 7 14 Balance at December 31, 2017 $ 600 $ 26 $ 107 $ 70 $ 803 (a) Related to TIC Gums Incorporated (“TIC Gums”) purchase price accounting adjustments The original carrying value of goodwill by reportable business segment and accumulated impairment charges by reportable business segment at December 31, 2017 and 2016 were as follows: North South Asia America America Pacific EMEA Total Goodwill before impairment charges $ 611 $ 59 $ 206 $ 63 $ 939 Accumulated impairment charges (1) (33) (121) — (155) Balance at December 31, 2016 610 26 85 63 784 Goodwill before impairment charges 601 59 228 70 958 Accumulated impairment charges (1) (121) — (155) Balance at December 31, 2017 $ 600 $ 26 $ 107 $ 70 $ 803 The following table summarizes the Company’s other intangible assets for the periods presented: As of December 31, 2017 (in millions) Gross Accumulated Amortization Net Weighted Average Useful Life (years) Trademarks/tradenames (indefinite-lived) $ 178 $ — $ 178 — Customer relationships 329 (62) 267 20 Technology 103 (68) 35 9 Other 22 (9) 13 16 Total other intangible assets $ 632 $ (139) $ 493 18 As of December 31, 2016 (in millions) Gross Accumulated Amortization Net Weighted Average Useful Life (years) Trademarks/tradenames (indefinite-lived) $ 143 $ — $ 143 — Customer relationships 227 (42) 185 20 Technology 100 (57) 43 10 TIC Gums intangible assets (preliminary) 117 — 117 Various Other 21 (7) 14 16 Total other intangible assets $ 608 $ (106) $ 502 17 For definite-lived intangible assets, the Company recognizes the cost of such amortizable assets in operations over their estimated useful lives and evaluates the recoverability of the assets whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Amortization expense related to intangible assets was $30 million in 2017, $25 million in 2016, and $22 million in 2015. Based on acquisitions completed through December 31, 2017, including the purchase price allocations for Sun Flour Industry Co., Ltd. (“Sun Flour”), intangible asset amortization expense for the next five years is shown below. The amortization is subject to change based on finalization of the purchase accounting for Sun Flour. (in millions) Year Amortization Expense 2018 $ 29 2019 29 2020 27 2021 19 2022 18 Balance thereafter 193 The Company assesses goodwill and other indefinite-lived intangible assets for impairment annually (or more frequently if impairment indicators arise). The Company has chosen to perform this annual impairment assessment as of October 1 of each year. In testing goodwill for impairment, the Company first assesses qualitative factors in determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. After assessing the qualitative factors, if the Company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount then the Company does not perform the two-step impairment test. If the Company concludes otherwise, then it performs the first step of the two-step impairment test as described in ASC Topic 350. In the first step (“Step One”), the fair value of the reporting unit is compared to its carrying value. If the fair value of the reporting unit exceeds the carrying value of its net assets, goodwill is not considered impaired and no further testing is required. If the carrying value of the net assets exceeds the fair value of the reporting unit, a second step (“Step Two”) of the impairment assessment is performed in order to determine the implied fair value of a reporting unit's goodwill. Determining the implied fair value of goodwill requires a valuation of the reporting unit's tangible and intangible assets and liabilities in a manner similar to the allocation of purchase price in a business combination. If the carrying value of the reporting unit's goodwill exceeds the implied fair value of its goodwill, goodwill is deemed impaired and is written down to the extent of the difference. Based on the results of the annual assessment, the Company concluded that as of October 1, 2017, it was more likely than not that the fair value of our reporting units was greater than their carrying value. We continue to monitor our reporting units in struggling economies and recent acquisitions for challenges in the business that may negatively impact the fair value of these reporting units. In testing indefinite-lived intangible assets for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of an indefinite-lived intangible asset is impaired. After assessing the qualitative factors, if the Company determines that it is not more likely than not that the fair value of an indefinite-lived intangible asset is less than its carrying amount, then it would not be required to compute the fair value of the indefinite-lived intangible asset. In the event the qualitative assessment leads the Company to conclude otherwise, then it would be required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test in accordance with ASC subtopic 350-30. In performing the qualitative analysis, the Company considers various factors including net sales derived from these intangibles and certain market and industry conditions. Based on the results of this qualitative assessment, the Company concluded that as of October 1, 2017, it was more likely than not that the fair value of the indefinite-lived intangible assets was greater than their carrying value. |
Revenue recognition | Revenue recognition: The Company recognizes operating revenues at the time title to the goods and all risks of ownership transfer to the customer. This transfer is considered complete when a sales agreement is in place, delivery has occurred, pricing is fixed or determinable and collection is reasonably assured. In the case of consigned inventories, the title passes and the transfer of ownership risk occurs when the goods are used by the customer. Taxes assessed by governmental authorities and collected from customers are accounted for on a net basis and excluded from revenues. |
Hedging instruments | Hedging instruments: The Company uses derivative financial instruments principally to offset exposure to market risks arising from changes in commodity prices, foreign currency exchange rates and interest rates. Derivative financial instruments used by the Company consist of commodity futures and option contracts, forward currency contracts and options, interest rate swap agreements and Treasury lock agreements (“T-Locks”). The Company enters into futures and option contracts, which are designated as hedges of specific volumes of commodities (primarily corn and natural gas) that will be purchased in a future month. These derivative financial instruments are recognized in the Consolidated Balance Sheets at fair value. The Company has also entered into interest rate swap agreements that effectively convert the interest rate on certain fixed rate debt to a variable interest rate and, on certain variable rate debt, to a fixed interest rate. The Company periodically enters into T-Locks to hedge its exposure to interest rate changes. See also Note 6 and Note 7 of the Notes to the Consolidated Financial Statements for additional information. On the date a derivative contract is entered into, the Company designates the derivative as either a hedge of variable cash flows to be paid related to interest on variable rate debt, as a hedge of market variation in the benchmark rate for a future fixed rate debt issue, as a hedge of foreign currency cash flows associated with certain forecasted commercial transactions or loans, as a hedge of certain forecasted purchases of corn, natural gas or ethanol used in the manufacturing process (“a cash flow hedge”), or as a hedge of the fair value of certain debt obligations (“a fair value hedge”). This process includes linking all derivatives that are designated as fair value or cash flow hedges to specific assets and liabilities on the Consolidated Balance Sheets, or to specific firm commitments or forecasted transactions. For all hedging relationships, the Company documents the hedging relationships and its risk-management objective and strategy for undertaking the hedge transactions, the hedging instrument, the hedged item, the nature of the risk being hedged, how the hedging instrument’s effectiveness in offsetting the hedged risk will be assessed and a description of the method of measuring ineffectiveness. The Company also formally assesses both, at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows or fair values of hedged items. When it is determined that a derivative is not highly effective as a hedge or has ceased to be a highly effective hedge, the Company discontinues hedge accounting prospectively. Changes in the fair value of floating-to-fixed interest rate swaps, T-Locks, commodity futures, and option contracts or foreign currency forward contracts, swaps, and options that are highly effective and that are designated and qualify as cash flow hedges are recorded in other comprehensive income, net of applicable income taxes. Realized gains and losses associated with changes in the fair value of interest rate swaps and T-Locks are reclassified from accumulated other comprehensive income (“AOCI”) to the Consolidated Statements of Income over the life of the underlying debt. Gains and losses on hedges of foreign currency cash flows associated with certain forecasted commercial transactions or loans are reclassified from AOCI to the Consolidated Statements of Income when such transactions or obligations are settled. Gains and losses on commodity hedging contracts are reclassified from AOCI to the Consolidated Statement of Income when the finished goods produced using the hedged item are sold. The maximum term over which the Company hedges exposures to the variability of cash flows for commodity price risk is generally 24 months. Changes in the fair value of a fixed-to-floating interest rate swap agreement that is highly effective and that is designated and qualifies as a fair value hedge, along with the loss or gain on the hedged debt obligation, are recorded in earnings. The ineffective portion of the change in fair value of a derivative instrument that qualifies as either a cash flow hedge or a fair value hedge is reported in earnings. The Company discontinues hedge accounting prospectively when it is determined that the derivative is no longer effective in offsetting changes in the cash flows or fair value of the hedged item, the derivative is de-designated as a hedging instrument because it is unlikely that a forecasted transaction will occur, or management determines that designation of the derivative as a hedging instrument is no longer appropriate. When hedge accounting is discontinued, the Company continues to carry the derivative on the Consolidated Balance Sheets at its fair value, and gains and losses that were included in AOCI are recognized in earnings in the same line item affected by the hedged transaction and in the same period or periods during which the hedged transaction affects earnings, or in the month a hedge is determined to be ineffective. The Company uses derivative financial instruments such as foreign currency forward contracts, swaps and options to manage the transactional foreign exchange risk that is created when transactions not denominated in the functional currency of the operating unit are revalued. The changes in fair value of these derivative instruments and the offsetting changes in the value of the underlying non-functional currency denominated transactions are recorded in earnings on a monthly basis. |
Stock-based compensation | Share-based compensation: The Company has a stock incentive plan that provides for share-based employee compensation, including the granting of stock options, shares of restricted stock, restricted stock units, and performance shares to certain key employees. Compensation expense is recognized in the Consolidated Statements of Income for the Company’s share-based employee compensation plan. The plan is more fully described in Note 12 of the Notes to the Consolidated Financial Statements. |
Earnings per common share | Earnings per common share: Basic earnings per common share (“EPS”) is computed by dividing net income attributable to Ingredion by the weighted average number of shares outstanding, which totaled 72.0 million for 2017, 72.3 million for 2016 and 71.6 million for 2015. Diluted EPS is calculated using the treasury stock method, computed by dividing net income attributable to Ingredion by the weighted average number of shares outstanding, including the dilutive effect of outstanding stock options and other instruments associated with long-term incentive compensation plans. The weighted average number of shares outstanding for diluted EPS calculations was 73.5 million, 74.1 million and 73.0 million for 2017, 2016, and 2015, respectively. Approximately 0.3 million, 0, and 0.3 million share-based awards of common stock were excluded in 2017, 2016, and 2015, respectively, from the calculation of the weighted average number of shares outstanding for diluted EPS because their effects were anti-dilutive. |
Risks and uncertainties | Risks and uncertainties: The Company operates domestically and internationally. In each country, the business and assets are subject to varying degrees of risk and uncertainty. The Company insures its business and assets in each country against insurable risks in a manner that it deems appropriate. Because of this geographic dispersion, the Company believes that a loss from non-insurable events in any one country would not have a material adverse effect on the Company’s operations as a whole. Additionally, the Company believes there is no significant concentration of risk with any single customer or supplier whose failure or non-performance would materially affect the Company’s results. |
Recently adopted accounting standards | 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 will adopt the standard as of the effective date, January 1, 2018. The standard will allow various transition approaches upon adoption. We plan to use the modified retrospective approach 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 have a material impact on the Company’s revenue recognition timing or amounts, as we have not identified any material 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 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 approach for the transition. We expect the adoption of the guidance in this Update to have a material impact on our Consolidated Balance Sheets, as operating leases will be recognized both as assets and liabilities on the Consolidated Balance Sheets. We are in the process of quantifying the magnitude of these changes and assessing the implementation approach for accounting for these changes. 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. 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 Consolidated Statements of Income for the non-operating income (loss) components. Net income within the 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. |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Summary of Significant Accounting Policies | |
Schedule of carrying amount of goodwill by geographic segment | The carrying value of goodwill by reportable business segment at December 31, 2017 and 2016 was as follows: North South Asia (in millions) America America Pacific EMEA Total Balance at December 31, 2015 $ 424 $ 22 $ 86 $ 69 $ 601 Acquisitions 186 — — — 186 Currency translation — 4 (1) (6) (3) Balance at December 31, 2016 610 26 85 63 784 Acquisitions (10) (a) — 15 — 5 Currency translation — — 7 7 14 Balance at December 31, 2017 $ 600 $ 26 $ 107 $ 70 $ 803 (a) Related to TIC Gums Incorporated (“TIC Gums”) purchase price accounting adjustments The original carrying value of goodwill by reportable business segment and accumulated impairment charges by reportable business segment at December 31, 2017 and 2016 were as follows: North South Asia America America Pacific EMEA Total Goodwill before impairment charges $ 611 $ 59 $ 206 $ 63 $ 939 Accumulated impairment charges (1) (33) (121) — (155) Balance at December 31, 2016 610 26 85 63 784 Goodwill before impairment charges 601 59 228 70 958 Accumulated impairment charges (1) (121) — (155) Balance at December 31, 2017 $ 600 $ 26 $ 107 $ 70 $ 803 |
Schedule of intangible assets | As of December 31, 2017 (in millions) Gross Accumulated Amortization Net Weighted Average Useful Life (years) Trademarks/tradenames (indefinite-lived) $ 178 $ — $ 178 — Customer relationships 329 (62) 267 20 Technology 103 (68) 35 9 Other 22 (9) 13 16 Total other intangible assets $ 632 $ (139) $ 493 18 As of December 31, 2016 (in millions) Gross Accumulated Amortization Net Weighted Average Useful Life (years) Trademarks/tradenames (indefinite-lived) $ 143 $ — $ 143 — Customer relationships 227 (42) 185 20 Technology 100 (57) 43 10 TIC Gums intangible assets (preliminary) 117 — 117 Various Other 21 (7) 14 16 Total other intangible assets $ 608 $ (106) $ 502 17 |
Schedule of amortization expense related to intangible assets | (in millions) Year Amortization Expense 2018 $ 29 2019 29 2020 27 2021 19 2022 18 Balance thereafter 193 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Acquisitions | |
Summary of final purchase price allocations for TIC Gums | (in millions) TIC Gums Kerr Working capital (excluding cash) $ 49 $ 37 Property, plant and equipment 37 8 Other assets — 1 Identifiable intangible assets 133 29 Goodwill 177 27 Total purchase price, net of cash $ 396 $ 102 |
Schedule of fair values, valuation techniques and estimated remaining useful life of acquired intangible assets | The following table presents the fair values, valuation techniques, and estimated remaining useful life at the acquisition date for these Level 3 measurements (dollars in millions): Estimated TIC Gums 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 Estimated Kerr Fair Value Valuation Technique Useful Life Customer relationships $ 24 Multi-period excess earnings method 15 years Trade names 4 Relief-from-royalty method 11 years Non-competition agreements 1 Income approach method 3 years |
Impairment and Restructuring 29
Impairment and Restructuring Charges (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Impairment and Restructuring Charges | |
Summary of restructuring reserve | A summary of the Company’s severance accrual at December 31, 2017, is as follows (in millions): 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 3 Prior year restructuring activities (2) Payments made to terminated employees (15) Balance in severance accrual as of December 31, 2017 $ 11 |
Financial Instruments, Deriva30
Financial Instruments, Derivatives and Hedging Activities (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Financial Instruments, Derivatives and Hedging Activities | |
Schedule of location and amount of assets and liabilities reported in balance sheet | Fair Value of Derivative Instruments as of December 31, 2017 Derivatives Designated as Hedging Instruments (in millions): Balance Sheet Location Fair Value Balance Sheet Location Fair Value Commodity and foreign currency Accounts receivable, net $ 11 Accounts payable and accrued liabilities $ 23 Commodity, foreign currency, and interest rate contracts Other assets 3 Non-current liabilities 8 Total $ 14 $ 31 Fair Value of Derivative Instruments as of December 31, 2016 Derivatives Designated as Hedging Instruments (in millions): Balance Sheet Location Fair Value Balance Sheet Location Fair Value Commodity and foreign currency Accounts receivable, net $ 31 Accounts payable and accrued liabilities $ 25 Commodity, foreign currency, and interest rate contracts Other assets 8 Non-current liabilities 2 $ 39 $ 27 |
Schedule of amount of gains and losses recognized in OCI and location and amount of gains and losses reported in income statement | Additional information relating to the Company’s derivative instruments is presented below (in millions, pre-tax): Year ended December 31, 2017 Derivatives in Cash Flow Hedging Relationships Amount of Gains Location of Gains (Losses) Reclassified from AOCI into Income Amount of Gains (Losses) Reclassified from AOCI into Income Commodity contracts $ (22) Cost of sales $ (5) Foreign currency contracts 6 Net sales/Cost of sales 1 Interest rate contracts — Financing costs, net (2) Total $ (16) $ (6) Year ended December 31, 2016 Derivatives in Cash Flow Hedging Relationships Amount of Gains Location of Gains (Losses) Reclassified from AOCI into Income Amount of Gains (Losses) Reclassified from AOCI into Income Commodity contracts $ (15) Cost of sales $ (45) Foreign currency contracts (2) Net sales/Cost of sales (2) Interest rate contracts — Financing costs, net (2) Total $ (17) $ (49) Year ended December 31, 2015 Derivatives in Cash Flow Hedging Relationships Amount of Gains Location of Gains (Losses) Reclassified from AOCI into Income Amount of Gains (Losses) Reclassified from AOCI into Income Commodity contracts $ (61) Cost of sales $ (43) Foreign currency contracts — Net sales/Cost of sales — Interest rate contracts — Financing costs, net (3) Total $ (61) $ (46) |
Schedule of fair value of financial instruments and derivatives | As of December 31, 2017 As of December 31, 2016 (in millions) Total Level 1 (a) Level 2 (b) Level 3 (c) Total Level 1 (a) Level 2 (b) Level 3 (c) Available for sale securities $ 10 $ 10 $ — $ — $ 7 $ 7 $ — $ — Derivative assets 14 3 11 — 39 6 33 — Derivative liabilities 31 11 20 — 27 11 16 — Long-term debt 1,845 — 1,845 — 1,929 — 1,929 — (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 used to measure fair value to the extent that observable inputs are not available, thereby allowing for fair value estimates to be made in situations in which there is little, if any, market activity for the asset or liability at the measurement date. |
Schedule of carrying amounts and fair values of long-term debt | December 31, 2017 December 31, 2016 Carrying Fair Carrying Fair (in millions) Amount Value Amount Value 3.2% senior notes due October 1, 2026 $ 496 $ 492 $ 496 $ 482 4.625% senior notes due November 1, 2020 398 421 398 428 6.625% senior notes due April 15, 2037 254 325 254 299 5.62% senior notes due March 25, 2020 200 212 200 217 1.8% senior notes due September 25, 2017 — — 299 301 6.0% senior notes due April 15, 2017 — — 200 202 Term loan credit agreement due April 25, 2019 395 395 — — Revolving credit facility — — — — Fair value adjustment related to hedged fixed rate debt instrument 1 — 3 — Total long-term debt $ 1,744 $ 1,845 $ 1,850 $ 1,929 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt | |
Schedule of components of long-term debt | (in millions) 2017 2016 3.2% senior notes due October 1, 2026 $ 496 $ 496 4.625% senior notes due November 1, 2020 398 398 6.625% senior notes due April 15, 2037 254 254 5.62% senior notes due March 25, 2020 200 200 1.8% senior notes due September 25, 2017 — 299 6.0% senior notes due April 15, 2017 — 200 Term loan credit agreement due April 25, 2019 395 — Revolving credit facility — — Fair value adjustment related to hedged fixed rate debt instruments 1 3 Long-term debt 1,744 1,850 Short-term borrowings 120 106 Total debt $ 1,864 $ 1,956 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Leases | |
Schedule of minimum lease payments due on leases | Year (in millions) Minimum Lease Payments 2018 $ 45 2019 40 2020 31 2021 25 2022 20 Balance thereafter 36 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Taxes | |
Schedule of income before income taxes and provision for income taxes | (in millions) 2017 2016 2015 Income before income taxes: U.S. $ 226 $ 176 $ 109 Foreign 543 566 490 Total income before income taxes 769 742 599 Provision for income taxes: Current tax (benefit) expense: U.S. federal (13) 95 26 State and local 4 8 3 Foreign 179 148 164 Total current tax expense 170 251 193 Deferred tax expense (benefit): U.S. federal 77 13 (8) State and local 4 1 (1) Foreign (14) (19) 3 Total deferred tax expense (benefit) 67 (5) (6) Total provision for income taxes $ 237 $ 246 $ 187 |
Schedule of tax effects of temporary differences between financial reporting basis and tax basis of assets and liabilities | (in millions) 2017 2016 Deferred tax assets attributable to: Employee benefit accruals $ 20 $ 39 Pensions and postretirement plans 20 30 Derivative contracts 5 3 Net operating loss carryforwards 32 18 Foreign tax credit carryforwards — 4 Other — 24 Gross deferred tax assets 77 118 Valuation allowances (34) (21) Net deferred tax assets 43 97 Deferred tax liabilities attributable to: Property, plant and equipment 185 206 Identified intangibles 37 55 Other 11 — Gross deferred tax liabilities 233 261 Net deferred tax liabilities $ 190 $ 164 |
Schedule of reconciliation of US federal statutory tax rate to effective tax rate | 2017 2016 2015 Provision for tax at U.S. statutory rate 35.0 % 35.0 % 35.0 % Tax rate difference on foreign income (5.6) (5.5) (5.8) State and local taxes, net 0.7 0.3 0.3 Tax impact of fluctuations in Mexican peso to U.S. dollar (0.5) 2.4 2.9 Net impact of U.S. foreign tax credits 0.3 (2.3) 0.9 Net impact of U.S.-Canada tax settlement (1.3) 3.2 — Net impact of valuation allowance in Argentina 2.0 1.0 — Net impact of transition tax 2.7 — — Net impact of U.S. deferred tax remeasurement (4.9) — — Net impact of provision for taxes on unremitted earnings 4.3 0.5 — Other items, net (1.9) (1.5) (2.1) Provision at effective tax rate 30.8 % 33.1 % 31.2 % |
Schedule of impact of the TCJA on 2017 income tax expense | (in millions) One-time transition tax $ 21 Remeasurement of deferred tax assets and liabilities (38) Net impact of provision for taxes on unremitted earnings 33 Other items, net 7 Net impact of the TCJA on our 2017 income tax expense $ 23 |
Schedule of reconciliation of beginning and ending amount of unrecognized tax benefits, excluding interest and penalties | (in millions) 2017 2016 Balance at January 1 $ 86 $ 12 Additions for tax positions related to prior years — 72 Reductions for tax positions related to prior years — (9) Additions based on tax positions related to the current year 12 12 Settlements (58) — Reductions related to a lapse in the statute of limitations (1) (1) Balance at December 31 $ 39 $ 86 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Schedule of amounts recognized in the consolidated balance sheets | U.S. Plans Non-U.S. Plans (in millions) 2017 2016 2017 2016 Non-current asset $ 23 $ 12 $ 37 $ 29 Current liabilities (2) (1) (1) (1) Non-current liabilities (10) (10) (49) (40) Net asset (liability) recognized $ 11 $ 1 $ (13) $ (12) |
Schedule of amounts recognized in accumulated other comprehensive loss | U.S. Plans Non-U.S. Plans (in millions) 2017 2016 2017 2016 Net actuarial loss $ 21 $ 28 $ 55 $ 52 Transition obligation — — 1 1 Prior service credit (6) (6) (1) (1) Net amount recognized $ 15 $ 22 $ 55 $ 52 |
Schedule of plan obligations and assets for plans with an accumulated benefit obligation in excess of plan assets | U.S. Plans Non-U.S. Plans (in millions) 2017 2016 2017 2016 Projected benefit obligation $ 12 $ 11 $ 51 $ 43 Accumulated benefit obligation 11 10 41 36 Fair value of plan assets — — 2 2 |
Components of net periodic benefit cost | Year Ended December 31, U.S. Plans Non-U.S. Plans (in millions) 2017 2016 2015 2017 2016 2015 Service cost $ 6 $ 6 $ 8 $ 3 $ 3 $ 4 Interest cost 13 14 14 11 10 12 Expected return on plan assets (21) (20) (24) (10) (10) (13) Amortization of actuarial loss — 1 1 2 2 3 Amortization of prior service credit (1) — — — — — Settlement loss — — (1) — 1 — Net periodic benefit cost $ (3) $ 1 $ (2) $ 6 $ 6 $ 6 |
Schedule of amounts recorded in other comprehensive income and net periodic benefit cost | (in millions, pre-tax) U.S. Plans Non-U.S. Plans 2017 2016 2015 2017 2016 2015 Net actuarial (gain) loss $ (7) $ 10 $ — $ (3) $ 6 $ (18) Prior service credit — (6) — — (1) — Amortization of actuarial loss — (1) (1) (2) (2) (3) Amortization of prior service credit 1 — — — — — Settlement gain — — 1 — — — Total recorded in other comprehensive income (6) 3 — (5) 3 (21) Net periodic benefit cost (3) 1 (2) 6 6 6 Total recorded in other comprehensive income and net periodic benefit cost $ (9) $ 4 $ (2) $ 1 $ 9 $ (15) |
Schedule of weighted average assumptions used to determine the company's obligations | U.S. Plans Non-U.S. Plans 2017 2016 2017 2016 Discount rate % % % % Rate of compensation increase |
Schedule of weighted average assumptions used to determine the company's net periodic benefit cost | U.S. Plans Non-U.S. Plans 2017 2016 2015 2017 2016 2015 Discount rate % % % % % % Expected long-term return on plan assets Rate of compensation increase |
Schedule of weighted average asset allocation | U.S. Plans Non-U.S. Plans Asset Category 2017 2016 2017 2016 Equity securities % % % % Debt securities Cash and other Total % % % % |
Schedule of fair values of the company's plan assets, by asset category and level | Fair Value Measurements at December 31, 2017 (in millions) Level 1 Level 2 Level 3 Total U.S. Plans: Equity index: U.S. ( a ) $ — $ 51 $ — $ 51 International ( b ) — 55 — 55 Fixed income index: Long bond ( c ) — 273 — 273 Long government bond ( d ) — 21 — 21 Cash ( e ) — 4 — 4 Total U.S. Plans $ — $ 404 $ — $ 404 Non-U.S. Plans: Equity index: U.S. ( a ) $ — $ 12 $ — $ 12 Canada ( f ) — 22 — 22 International ( b ) — 52 — 52 Real estate ( g ) — 5 — 5 Fixed income index: Intermediate bond (h) — 25 — 25 Long bond ( i ) — 84 — 84 Other (j) — 24 — 24 Cash ( e ) 2 9 — 11 Total Non-U.S. Plans $ 2 $ 233 $ — $ 235 Fair Value Measurements at December 31, 2016 (in millions) Level 1 Level 2 Level 3 Total U.S. Plans: Equity index: U.S. ( a ) $ — $ 70 $ — $ 70 International ( b ) — 68 — 68 Fixed income index: Long bond ( c ) — 227 — 227 Cash ( e ) — 3 — 3 Total U.S. Plans $ — $ 368 $ — $ 368 Non-U.S. Plans: Equity index: U.S. ( a ) $ — $ 11 $ — $ 11 Canada ( f ) — 21 — 21 International ( b ) — 49 — 49 Real estate ( g) — 5 — 5 Fixed income index: Intermediate bond (h) — 21 — 21 Long bond ( i ) — 72 — 72 Other (j) — 23 — 23 Cash ( e ) 1 8 — 9 Total Non-U.S. Plans $ 1 $ 210 $ — $ 211 (a) This category consists of both passively and actively managed equity index funds that track the return of large capitalization U.S. equities. (b) This category consists of both passively and actively managed equity index funds that track an index of returns on international developed market equities as well as infrastructure assets. (c) This category consists of an actively managed fixed income index fund that invests in a diversified portfolio of fixed-income corporate securities with maturities generally exceeding 10 years. (d) This category consists of an actively managed fixed income index fund that invests in a diversified portfolio of fixed-income U.S. treasury securities with maturities generally exceeding 10 years. (e) This category represents cash or cash equivalents. (f) This category consists of an actively managed equity index fund that tracks against an index of large capitalization Canadian equities. (g) This category consists of an actively managed equity index fund that tracks against real estate investment trusts and real estate operating companies. (h) This category consists of both passively and actively managed fixed income index funds that track the return of intermediate duration government and investment grade corporate bonds. (i) This category consists of both passively and actively managed fixed income index funds that track the return of Canada government bonds, investment grade corporate bonds and hedge funds. (j) This category mainly consists of investment products provided by an insurance company that offers returns that are subject to a minimum guarantee and mutual funds. |
Schedule of benefit payments, which reflect anticipated future service, as appropriate and are expected to be made | (in millions) U.S. Plans Non-U.S. Plans 2018 $ 21 $ 11 2019 20 12 2020 21 12 2021 22 12 2022 23 12 Years 2023 - 2027 124 70 |
Pension Plan | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Schedule of funded status | U.S. Plans Non-U.S. Plans (in millions) 2017 2016 2017 2016 Benefit obligation At January 1 $ 367 $ 359 $ 223 $ 219 Service cost 6 6 3 3 Interest cost 13 14 11 10 Benefits paid (23) (16) (12) (15) Actuarial (gain) loss 30 10 7 6 Curtailment/settlement/amendments — (6) — (5) Foreign currency translation — — 16 5 Benefit obligation at December 31 $ 393 $ 367 $ 248 $ 223 Fair value of plan assets At January 1 $ 368 $ 354 $ 211 $ 206 Actual return on plan assets 59 20 17 11 Employer contributions — 10 5 7 Benefits paid (23) (16) (12) (15) Plan settlements — — — (5) Foreign currency translation — — 14 7 Fair value of plan assets at December 31 $ 404 $ 368 $ 235 $ 211 Funded status $ 11 $ 1 $ (13) $ (12) |
Postemployment Retirement Benefits | |
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items] | |
Schedule of funded status | (in millions) 2017 2016 Accumulated postretirement benefit obligation At January 1 $ 67 $ 64 Service cost 1 1 Interest cost 3 2 Employee contributions 1 — Actuarial loss 2 2 Benefits paid (4) (4) Foreign currency translation — 2 At December 31 70 67 Fair value of plan assets — — Funded status $ (70) $ (67) |
Schedule of amounts recognized in the consolidated balance sheets | (in millions) 2017 2016 Current liabilities $ (4) $ (4) Non-current liabilities (66) (63) Net liability recognized $ (70) $ (67) |
Schedule of amounts recognized in accumulated other comprehensive loss | (in millions) 2017 2016 Net actuarial loss $ 11 $ 7 Prior service credit (8) Net amount recognized $ 5 $ (1) |
Components of net periodic benefit cost | Year Ended December 31, (in millions) 2017 2016 2015 Service cost $ 1 $ 1 $ 1 Interest cost 3 2 3 Amortization of prior service credit (3) (2) (2) Net periodic benefit cost $ 1 $ 1 $ 2 |
Schedule of amounts recorded in other comprehensive income and net periodic benefit cost | (in millions, pre-tax) 2017 2016 2015 Net actuarial loss (gain) $ 2 $ 2 $ (2) Amortization of prior service credit 3 2 2 New prior service credit — — 2 Total recorded in other comprehensive income 5 4 2 Net periodic benefit cost 1 1 2 Total recorded in other comprehensive income and net periodic benefit cost $ 6 $ 5 $ 4 |
Schedule of weighted average assumptions used to determine the company's obligations | 2017 2016 Discount rate % % |
Schedule of weighted average assumptions used to determine the company's net periodic benefit cost | 2017 2016 2015 Discount rate % % % |
Schedule of assumptions made in measuring the company's postretirement benefit obligation | U.S. Canada Brazil 2017 increase in per capita cost % % % Ultimate trend % % % Year ultimate trend reached |
Sensitivity to Trend Assumptions | (in millions) 2017 One-percentage point increase in trend rates: - Increase in service cost and interest cost components $ 1 - Increase in year-end benefit obligations 7 One-percentage point decrease in trend rates: - Decrease in service cost and interest cost components 1 - Decrease in year-end benefit obligations 6 |
Schedule of benefit payments, which reflect anticipated future service, as appropriate and are expected to be made | (in millions) 2018 $ 4 2019 4 2020 4 2021 4 2022 5 Years 2023 - 2027 24 |
Supplementary Information (Tabl
Supplementary Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Supplementary Information | |
Balance Sheets - supplementary information | (in millions) 2017 2016 Accounts receivable, net: Accounts receivable — trade $ 760 $ 751 Accounts receivable — other 209 178 Allowance for doubtful accounts (8) (6) Total accounts receivable, net 961 923 Inventories: Finished and in process 495 478 Raw materials 278 260 Manufacturing supplies 50 51 Total inventories 823 789 Accrued liabilities: Compensation-related costs 101 107 Income taxes payable 22 40 Unrecognized tax benefits — 72 Dividends payable 44 36 Accrued interest 15 19 Taxes payable other than income taxes 37 36 Other 125 122 Total accrued liabilities 344 432 Non-current liabilities: Employees’ pension, indemnity, and postretirement 121 109 Other 106 49 Total non-current liabilities $ 227 $ 158 |
Statements of Income - supplementary information | (in millions) 2017 2016 2015 Other income, net: Insurance settlement $ 9 $ — $ — Value-added tax recovery 6 5 4 Gain from sale of plant — — 10 Legal settlement — — (7) Income tax indemnification expense (a) — — (4) Other 3 (1) (2) Other income, net $ $ $ (a) Amount fully offset by $4 million of benefit recorded in the income tax provision for 2015. (in millions) 2017 2016 2015 Financing costs, net: Interest expense, net of amounts capitalized (a) $ 79 $ 73 $ 69 Interest income (11) (10) (14) Foreign currency transaction losses 5 3 6 Financing costs, net $ $ $ (a) Interest capitalized amounted to $4 million, $4 million, and $2 million in 2017, 2016 and 2015, respectively. |
Statements of Cash Flow - supplementary information | (in millions) 2017 2016 2015 Other non-cash charges to net income: Share-based compensation expense $ 26 $ 28 $ 21 Other 13 16 18 Total other non-cash charges to net income $ 39 $ 44 $ 39 (in millions) 2017 2016 2015 Interest paid $ 77 $ 59 $ 52 Income taxes paid 289 254 158 |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity | |
Schedule of reconciliation of common stock share activity | (Shares of common stock, in thousands) Issued Held in Treasury Outstanding Balance at December 31, 2014 77,811 6,489 71,322 Issuance of restricted stock units as compensation — (102) 102 Performance shares and other share-based awards — (75) 75 Stock options exercised — (556) 556 Purchase/acquisition of treasury stock — 439 (439) Balance at December 31, 2015 77,811 6,195 71,616 Issuance of restricted stock units as compensation — (94) 94 Performance shares and other share-based awards — (70) 70 Stock options exercised — (636) 636 Purchase/acquisition of treasury stock — 2 (2) Balance at December 31, 2016 77,811 5,397 72,414 Issuance of restricted stock units as compensation — (103) 103 Performance shares and other share-based awards — (75) 75 Stock options exercised — (443) 443 Purchase/acquisition of treasury stock — 1,039 (1,039) Balance at December 31, 2017 77,811 5,815 71,996 |
Schedule of stock based compensation expense | (in millions) 2017 2016 2015 Stock options: Pre-tax compensation expense $ 7 $ 9 $ 7 Income tax benefit (2) (3) (3) Stock option expense, net of income taxes 5 6 4 RSUs: Pre-tax compensation expense 13 12 9 Income tax benefit (4) (5) (3) RSUs, net of income taxes 9 7 6 Performance shares and other share-based awards: Pre-tax compensation expense 6 7 5 Income tax benefit (2) (3) (2) Performance shares and other share-based compensation expense, net of income taxes 4 4 3 Total share-based compensation: Pre-tax compensation expense 26 28 21 Income tax benefit (8) (11) (8) Total share-based compensation expense, net of income taxes $ 18 $ 17 $ 13 |
Schedule of valuation assumptions for stock options | For the Year Ended December 31, 2017 2016 2015 Expected life (in years) 5.5 5.5 5.5 Risk-free interest rate % % % Expected volatility % % % Expected dividend yield % % % |
Schedule of summary of information about outstanding and exercisable stock options, by range of exercise prices | Weighted Average Average Aggregate 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 Granted 278 117.65 Exercised (443) 46.16 Cancelled (21) 87.50 Outstanding as of December 31, 2017 2,095 $ 71.81 5.87 $ 142 Exercisable as of December 31, 2017 1,527 $ 59.14 5.24 $ 123 |
Schedule of stock option activity | Year Ended December 31, (dollars in millions, except per share) 2017 2016 2015 Weighted average grant date fair value of stock options granted (per share) $ 23.90 $ 18.73 $ 16.04 Total intrinsic value of stock options exercised 35 46 27 |
Schedule of restricted unit activity | Weighted Number of Average Restricted Fair Value (shares in thousands) Shares per Share Non-vested at December 31, 2016 429 $ 81.04 Granted 125 119.54 Vested (148) 65.03 Cancelled (19) 95.17 Non-vested at December 31, 2017 387 $ 100.13 |
Summary of net changes in accumulated other comprehensive loss | Deferred Unrealized Accumulated Cumulative (Loss) Gain Pension and (Loss) Other Translation on Hedging Postretirement Gain on Comprehensive (in millions) Adjustment Activities Adjustment Investment (Loss) Gain Balance, December 31, 2014 $ (701) $ (19) $ (61) $ (1) $ (782) Other comprehensive (loss) income before reclassification adjustments (324) (61) 18 — (367) Amount reclassified from accumulated OCI — 46 1 — 47 Tax benefit (provision) — 5 (5) — — Net other comprehensive (loss) income (324) (10) 14 — (320) Balance, December 31, 2015 (1,025) (29) (47) (1) (1,102) Other comprehensive income (loss) before reclassification adjustments 17 (17) (14) 1 (13) Amount reclassified from accumulated OCI — 49 1 — 50 Tax (provision) benefit — (10) 4 — (6) Net other comprehensive income (loss) 17 22 (9) 1 31 Balance, December 31, 2016 (1,008) (7) (56) — (1,071) Other comprehensive income (loss) before reclassification adjustments 57 (16) 8 3 52 Amount reclassified from accumulated OCI — 6 (2) — 4 Tax benefit (provision) — 4 (1) (1) 2 Net other comprehensive income (loss) 57 (6) 5 2 58 Balance, December 31, 2017 $ (951) $ (13) $ (51) $ 2 $ (1,013) |
Schedule of reclassifications from AOCI into net income | Affected Line Item in Amount Reclassified from AOCI Consolidated (in millions) 2017 2016 2015 Statements of Income Gains (losses) on cash flow hedges: Commodity contracts $ (5) $ (45) $ (43) Cost of sales Foreign currency contracts 1 (2) — Net sales/Cost of sales Interest rate contracts (2) (2) (3) Financing costs, net Gains (losses) related to pension and other postretirement obligations 2 (1) (1) (a) Total before-tax reclassifications (4) (50) (47) Tax benefit 1 16 14 Total after-tax reclassifications $ (3) $ (34) $ (33) (a) This component is included in the computation of net periodic benefit cost and affects both cost of sales and operating expenses on the Consolidated Statements of Income. |
Schedule of basic and diluted earnings per common share | Year ended December 31, 2017 2016 2015 Net Income Weighted Per Net Income Weighted Per Net Income Weighted Per Available Average Share Available Average Share Available Average Share (in millions, except per share amounts) to Ingredion Shares Amount to Ingredion Shares Amount to Ingredion Shares Amount Basic EPS $ 519 72.0 $ 7.21 $ 485 72.3 $ 6.70 $ 402 71.6 $ 5.62 Effect of Dilutive Securities: Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards 1.5 1.8 1.4 Diluted EPS $ 519 73.5 $ 7.06 $ 485 74.1 $ 6.55 $ 402 73.0 $ 5.51 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Information | |
Schedule of segment reporting of net sales, operating income and total assets | (in millions) 2017 2016 2015 Net sales to unaffiliated customers: North America $ 3,529 $ 3,447 $ 3,345 South America 1,007 1,010 1,013 Asia Pacific 740 709 733 EMEA 556 538 530 Total $ 5,832 $ 5,704 $ 5,621 Operating income: North America $ 661 $ 610 $ 479 South America 80 89 101 Asia Pacific 112 111 107 EMEA 113 106 93 Corporate (a) (82) (86) (75) Subtotal 884 830 705 Restructuring/impairment charges (b) (38) (19) (28) Acquisition/integration costs (4) (3) (10) Charge for fair value markup of acquired inventory (9) — (10) Insurance settlement 9 — — Litigation settlement — — (7) Gain from land sale — — 10 Total operating income 842 808 660 Financing costs, net 73 66 61 Income before income taxes $ 769 $ 742 $ 599 (a) For 2015, includes $4 million of expense relating to a tax indemnification agreement with offsetting income of $4 million recorded in the provision for income taxes (see Note 9). (b) For 2017, includes $17 million of employee-related severance and other costs associated with the restructuring in Argentina, $13 million of restructuring of related to our leaf extraction process in Brazil, $6 million of employee-related severance and other costs associated with the Finance Transformation initiative, and $2 million of other restructuring charges including employee-related severance costs in North America and a refinement of estimates for prior year restructuring activities. For 2016, includes $11 million of employee-related severance and other costs associated with the execution of IT outsourcing contracts, $6 million of employee-related severance costs associated with our optimization initiative in North America and South America, and $2 million of costs attributable to the Port Colborne plant sale. For 2015, includes $12 million of charges for impaired assets and restructuring costs in Brazil, $12 million of restructuring costs associated with the Penford acquisition, and $4 million of restructuring costs in Canada. As of December 31, (in millions) 2017 2016 Total assets: North America (a) $ 3,967 $ 3,796 South America 812 809 Asia Pacific 774 697 EMEA 527 480 Total $ 6,080 $ 5,782 (a) For purposes of presentation, North America includes Corporate assets. (in millions) 2017 2016 2015 Depreciation and amortization: North America (a) $ 140 $ 130 $ 123 South America 27 26 30 Asia Pacific 25 23 23 EMEA 17 17 18 Total $ 209 $ 196 $ 194 Mechanical stores expense (b) : North America (a) $ 37 $ 37 $ 36 South America 12 12 13 Asia Pacific 5 5 5 EMEA 3 3 3 Total $ 57 $ 57 $ 57 Capital expenditures and mechanical stores purchases: North America (a) $ 180 $ 167 $ 158 South America 50 56 61 Asia Pacific 51 41 36 EMEA 33 20 25 Total $ 314 $ 284 $ 280 (a) For purposes of presentation, North America includes Corporate activities of depreciation, amortization, capital expenditures, and mechanical stores purchase, respectively. (a) Represents spare parts used in the production process. Such spare parts are recorded in PP&E as part of machinery and equipment until they are utilized in the manufacturing process and expensed as a period cost. |
Schedule of net sales to unaffiliated customers by country of origin | Net Sales (in millions) 2017 2016 2015 U.S. $ 2,191 $ 2,117 $ 1,983 Mexico 952 955 945 Brazil 519 522 452 Canada 385 375 417 Korea 275 266 276 Others 1,510 1,469 1,548 Total $ 5,832 $ 5,704 $ 5,621 |
Schedule of long-lived assets (excluding intangible assets) by country | Long-lived Assets (in millions) 2017 2016 U.S. $ 977 $ 955 Mexico 306 303 Brazil 235 245 Canada 179 147 Thailand 137 119 Germany 133 106 Korea 109 84 Others 284 278 Total $ 2,360 $ 2,237 |
Quarterly Financial Data (Una38
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Data (Unaudited) | |
Schedule of quarterly financial data | (in millions, except per share amounts) 1 st QTR (a) 2 nd QTR (b) 3 rd QTR (c) 4 th QTR (d) 2017 Net sales before shipping and handling costs $ 1,537 $ 1,542 $ 1,574 $ 1,527 Less: shipping and handling costs 84 85 89 90 Net sales 1,453 1,457 1,485 1,437 Gross profit 352 373 388 360 Net income attributable to Ingredion 124 130 166 Basic earnings per common share of Ingredion 1.72 1.81 2.31 1.37 Diluted earnings per common share of Ingredion 1.68 1.78 2.26 1.35 Per share dividends declared $ 0.50 $ 0.50 $ 0.60 $ 0.60 (in millions, except per share amounts) 1 st QTR (e) 2 nd QTR (f) 3 rd QTR (g) 4 th QTR (h) 2016 Net sales before shipping and handling costs $ 1,434 $ 1,533 $ 1,569 $ 1,484 Less: shipping and handling costs 74 78 80 85 Net sales 1,360 1,455 1,489 1,399 Gross profit 339 355 369 339 Net income attributable to Ingredion 130 117 143 94 Basic earnings per common share of Ingredion 1.81 1.62 1.98 1.29 Diluted earnings per common share of Ingredion 1.77 1.58 1.93 1.26 Per share dividends declared $ 0.45 $ 0.45 $ 0.50 $ 0.50 (a) In the first quarter of 2017, the Company recorded $11 million in after-tax, net restructuring costs, $3 million in after-tax non-cash inventory charges related to the TIC acquisition, and $1 million in after-tax acquisition and integration costs. (b) In the second quarter of 2017, the Company recorded $5 million in after-tax, net restructuring costs and $3 million in after-tax, non-cash inventory charges. (c) In the third quarter of 2017, the Company recorded a $10 million gain related to an income tax settlement, $5 million in after-tax, net restructuring costs, and $1 million in after-tax acquisition and integration costs. (d) In the fourth quarter of 2017, the Company recorded a $23 million after-tax charge related to the enactment of the TCJA, $10 million in after-tax, net restructuring costs, a $6 million after-tax gain related to insurance settlement, and $1 million in after-tax acquisition and integration costs. (e) In the first quarter of 2016, the Company recorded $1 million in after-tax acquisition and integration costs. (f) In the second quarter of 2016, the Company recorded $10 million in after-tax, net restructuring costs. (g) In the third quarter of 2016, the Company recorded $2 million in after-tax, net restructuring costs. (h) In the fourth quarter of 2016, the Company recorded a $27 million charge related to an income tax settlement, $2 million in after-tax, net restructuring charges, and $1 million in after-tax acquisition and integration costs. |
Summary of Significant Accoun39
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | |||
Foreign currency transaction losses | $ 5 | $ 3 | $ 6 |
Foreign currency transaction and translation | |||
Cumulative translation loss adjustments | 1,000 | 1,000 | |
Investments | |||
Cost Method Investments | 2 | 2 | |
Depreciation expense | 179 | 171 | 172 |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill | 803 | 784 | $ 601 |
Intangible Assets, Net (Excluding Goodwill) | $ 493 | $ 502 | |
Building | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 25 years | ||
Building | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 50 years | ||
Other Capitalized Property Plant and Equipment | Minimum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 2 years | ||
Other Capitalized Property Plant and Equipment | Maximum | |||
Property, Plant and Equipment [Line Items] | |||
Useful life | 25 years |
Summary of Significant Accoun40
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Carrying amount of goodwill | ||
Balance at the beginning of the period | $ 784 | $ 601 |
Acquisitions | 5 | 186 |
Currency translation | 14 | (3) |
Balance at the end of the period | 803 | 784 |
Carrying value of goodwill and accumulated impairment charges | ||
Goodwill before impairment charges | 958 | 939 |
Accumulated impairment charges | (155) | (155) |
Balance at the end of the period | 803 | 784 |
North America | ||
Carrying amount of goodwill | ||
Balance at the beginning of the period | 610 | 424 |
Acquisitions | (10) | 186 |
Balance at the end of the period | 600 | 610 |
Carrying value of goodwill and accumulated impairment charges | ||
Goodwill before impairment charges | 601 | 611 |
Accumulated impairment charges | (1) | (1) |
Balance at the end of the period | 600 | 610 |
South America | ||
Carrying amount of goodwill | ||
Balance at the beginning of the period | 26 | 22 |
Currency translation | 4 | |
Balance at the end of the period | 26 | 26 |
Carrying value of goodwill and accumulated impairment charges | ||
Goodwill before impairment charges | 59 | 59 |
Accumulated impairment charges | (33) | (33) |
Balance at the end of the period | 26 | 26 |
Asia Pacific | ||
Carrying amount of goodwill | ||
Balance at the beginning of the period | 85 | 86 |
Acquisitions | 15 | |
Currency translation | 7 | (1) |
Balance at the end of the period | 107 | 85 |
Carrying value of goodwill and accumulated impairment charges | ||
Goodwill before impairment charges | 228 | 206 |
Accumulated impairment charges | (121) | (121) |
Balance at the end of the period | 107 | 85 |
EMEA | ||
Carrying amount of goodwill | ||
Balance at the beginning of the period | 63 | 69 |
Currency translation | 7 | (6) |
Balance at the end of the period | 70 | 63 |
Carrying value of goodwill and accumulated impairment charges | ||
Goodwill before impairment charges | 70 | 63 |
Balance at the end of the period | $ 70 | $ 63 |
Summary of Significant Accoun41
Summary of Significant Accounting Policies (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Identifiable intangible assets | |||
Gross | $ 632 | $ 608 | |
Accumulated Amortization | (139) | (106) | |
Net | $ 493 | $ 502 | |
Weighted Average Useful Life (years) | 18 years | 17 years | |
Amortization expense | $ 30 | $ 25 | $ 22 |
Expected intangible amortization expense for subsequent years | |||
2,018 | 29 | ||
2,019 | 29 | ||
2,020 | 27 | ||
2,021 | 19 | ||
2,022 | 18 | ||
Balance thereafter | $ 193 | ||
Hedging instruments | |||
Maximum term over which the company hedges exposures to the variability of cash flows for commodity price risk | 24 months | ||
Earnings per common share | |||
Weighted average number of shares outstanding, basic | 72,000,000 | 72,300,000 | 71,600,000 |
Weighted average number of shares outstanding, diluted | 73,500,000 | 74,100,000 | 73,000,000 |
Antidilutive securities excluded from computation of earnings per share amount | 300,000 | 0 | 300,000 |
Trademarks/tradenames | |||
Identifiable intangible assets | |||
Gross | $ 178 | $ 143 | |
Net | 178 | 143 | |
Customer relationships | |||
Identifiable intangible assets | |||
Gross | 329 | 227 | |
Accumulated Amortization | (62) | (42) | |
Net | $ 267 | $ 185 | |
Weighted Average Useful Life (years) | 20 years | 20 years | |
Technology | |||
Identifiable intangible assets | |||
Gross | $ 103 | $ 100 | |
Accumulated Amortization | (68) | (57) | |
Net | $ 35 | $ 43 | |
Weighted Average Useful Life (years) | 9 years | 10 years | |
TIC Gums intangible assets (preliminary) | |||
Identifiable intangible assets | |||
Gross | $ 117 | ||
Net | 117 | ||
Other | |||
Identifiable intangible assets | |||
Gross | $ 22 | 21 | |
Accumulated Amortization | (9) | (7) | |
Net | $ 13 | $ 14 | |
Weighted Average Useful Life (years) | 16 years | 16 years |
Acquisitions (Details)
Acquisitions (Details) $ in Millions | Mar. 09, 2017USD ($) | Dec. 29, 2016USD ($) | Nov. 29, 2016USD ($) | Aug. 03, 2015USD ($) | Mar. 11, 2015USD ($)Plant | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Business Acquisition [Line Items] | ||||||||
Goodwill | $ 803 | $ 784 | $ 601 | |||||
Consideration net of cash | 17 | 407 | 434 | |||||
TIC Gums | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill | $ 177 | |||||||
Consideration net of cash | 396 | |||||||
Kerr | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill | $ 27 | |||||||
Consideration net of cash | 102 | |||||||
Shandong Huanong | ||||||||
Business Acquisition [Line Items] | ||||||||
Cash consideration | $ 12 | |||||||
Sun Flour | ||||||||
Business Acquisition [Line Items] | ||||||||
Total purchase consideration | $ 18 | |||||||
Cash consideration | 16 | |||||||
Liabilities assumed | 2 | |||||||
Penford | ||||||||
Business Acquisition [Line Items] | ||||||||
Total purchase consideration | $ 332 | |||||||
Extinguishment of debt in conjunction with the acquisition | $ 93 | |||||||
Number of Plants | Plant | 6 | |||||||
North America | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill | 600 | 610 | 424 | |||||
North America | TIC Gums | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill | 175 | |||||||
North America | Kerr | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill | $ 27 | |||||||
North America | Penford | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill | $ 121 | |||||||
Asia Pacific | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill | $ 107 | $ 85 | $ 86 | |||||
Asia Pacific | TIC Gums | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill | $ 2 | |||||||
Asia Pacific | Sun Flour | ||||||||
Business Acquisition [Line Items] | ||||||||
Goodwill | $ 14 |
Acquisitions - Purchase price a
Acquisitions - Purchase price allocations (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 29, 2016 | Dec. 31, 2015 | Aug. 03, 2015 |
Final purchase price allocation | |||||
Goodwill | $ 803 | $ 784 | $ 601 | ||
TIC Gums | |||||
Final purchase price allocation | |||||
Working capital (excluding cash) | $ 49 | ||||
Property, plant and equipment | 37 | ||||
Identifiable intangible assets | 133 | ||||
Goodwill | 177 | ||||
Total final purchase price, net of cash | $ 396 | ||||
Kerr | |||||
Final purchase price allocation | |||||
Working capital (excluding cash) | $ 37 | ||||
Property, plant and equipment | 8 | ||||
Other assets | 1 | ||||
Identifiable intangible assets | 29 | ||||
Goodwill | 27 | ||||
Total final purchase price, net of cash | $ 102 |
Acquisitions - Fair Value (Deta
Acquisitions - Fair Value (Details) - USD ($) $ in Millions | Mar. 09, 2017 | Dec. 29, 2016 | Nov. 29, 2016 | Aug. 03, 2015 | Mar. 11, 2015 | Dec. 31, 2017 | Sep. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Other disclosures | |||||||||||||
Consideration net of cash | $ 17 | $ 407 | $ 434 | ||||||||||
Increase in pre-tax cost of sales for fair value mark-up of acquired inventory | 9 | 10 | |||||||||||
Pre-tax Acquisition and integration costs | $ 1 | $ 1 | $ 1 | $ 1 | $ 1 | 4 | $ 3 | $ 10 | |||||
TIC Gums | |||||||||||||
Other disclosures | |||||||||||||
Consideration net of cash | $ 396 | ||||||||||||
Tangible assets | 37 | ||||||||||||
Kerr | |||||||||||||
Other disclosures | |||||||||||||
Consideration net of cash | $ 102 | ||||||||||||
Tangible assets | 8 | ||||||||||||
Shandong Huanong | |||||||||||||
Other disclosures | |||||||||||||
Cash consideration | $ 12 | ||||||||||||
Tangible assets | $ 9 | ||||||||||||
Sun Flour | |||||||||||||
Other disclosures | |||||||||||||
Cash consideration | $ 16 | ||||||||||||
Total purchase consideration | $ 18 | ||||||||||||
Intangible Assets, Net (Including Goodwill) | $ 21 | ||||||||||||
Penford | |||||||||||||
Other disclosures | |||||||||||||
Total purchase consideration | $ 332 | ||||||||||||
Fair Value, Inputs, Level 3 | TIC Gums | Customer relationships | Multi-period excess earnings method | |||||||||||||
Identifiable intangible assets | |||||||||||||
Fair Value | $ 94 | ||||||||||||
Estimated Remaining Useful Life | 20 years | ||||||||||||
Fair Value, Inputs, Level 3 | TIC Gums | Trade names | Relief-from-royalty method | |||||||||||||
Identifiable intangible assets | |||||||||||||
Fair Value | $ 35 | ||||||||||||
Fair Value, Inputs, Level 3 | TIC Gums | Technology | Relief-from-royalty method | |||||||||||||
Identifiable intangible assets | |||||||||||||
Fair Value | $ 4 | ||||||||||||
Estimated Remaining Useful Life | 8 years | ||||||||||||
Fair Value, Inputs, Level 3 | Kerr | Customer relationships | Multi-period excess earnings method | |||||||||||||
Identifiable intangible assets | |||||||||||||
Fair Value | $ 24 | ||||||||||||
Estimated Remaining Useful Life | 15 years | ||||||||||||
Fair Value, Inputs, Level 3 | Kerr | Trade names | Relief-from-royalty method | |||||||||||||
Identifiable intangible assets | |||||||||||||
Fair Value | $ 4 | ||||||||||||
Estimated Remaining Useful Life | 11 years | ||||||||||||
Fair Value, Inputs, Level 3 | Kerr | Noncompetition Agreements | Income Approach | |||||||||||||
Identifiable intangible assets | |||||||||||||
Fair Value | $ 1 | ||||||||||||
Estimated Remaining Useful Life | 3 years |
Sale of Canadian Plant (Details
Sale of Canadian Plant (Details) - USD ($) $ in Millions | Dec. 15, 2015 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||
Restructuring charges | $ 10 | $ 5 | $ 5 | $ 11 | $ 2 | $ 2 | $ 10 | $ 38 | $ 19 | $ 28 | |
Disposal Group, Disposed of by Sale, Not Discontinued Operations [Member] | Manufacturing assets in Port Colborne, Ontario, Canada | |||||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||||||||
Consideration for the sale of assets | $ 35 | ||||||||||
Gain from sale of Canadian plant | 10 | ||||||||||
Goodwill written-off | $ 2 | ||||||||||
Restructuring charges | $ 2 | $ 4 |
Impairment and Restructuring 46
Impairment and Restructuring Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Restructuring and asset impairment charges | |||||||||||
Restructuring charges | $ 10 | $ 5 | $ 5 | $ 11 | $ 2 | $ 2 | $ 10 | $ 38 | $ 19 | $ 28 | |
Other restructuring charges including refinement of prior year restructuring activities | 2 | ||||||||||
Argentina employee-related severance | |||||||||||
Restructuring and asset impairment charges | |||||||||||
Restructuring charges | 17 | ||||||||||
Finance transformation initiative in North America | |||||||||||
Restructuring and asset impairment charges | |||||||||||
Restructuring charges | 6 | ||||||||||
Stevia Leaf Extraction Process in Brazil | |||||||||||
Restructuring and asset impairment charges | |||||||||||
Restructuring charges | 13 | 13 | |||||||||
Abandonment of certain assets | 6 | ||||||||||
Inventory write downs | 6 | ||||||||||
Restructuring accrual | |||||||||||
Restructuring charge for employee-related severance costs | 1 | ||||||||||
Stevia Leaf Extraction Process in Brazil | Forecast | |||||||||||
Restructuring and asset impairment charges | |||||||||||
Other additional restructuring charges | $ 1 | ||||||||||
Penford | |||||||||||
Restructuring and asset impairment charges | |||||||||||
Restructuring charges | 12 | ||||||||||
Employee Severance related costs | |||||||||||
Restructuring accrual | |||||||||||
Balance in severance accrual at December 31, 2016 | $ 7 | 11 | 7 | ||||||||
Payments made to terminated employees | (15) | ||||||||||
Balance in severance accrual at September 30, 2017 | $ 11 | $ 7 | 11 | 7 | |||||||
Employee Severance related costs | Forecast | |||||||||||
Restructuring and asset impairment charges | |||||||||||
Severance accrual expected to be paid within next twelve months | 10 | ||||||||||
Employee Severance related costs | Argentina employee-related severance | |||||||||||
Restructuring accrual | |||||||||||
Restructuring charge for employee-related severance costs | 15 | ||||||||||
Employee Severance related costs | Finance transformation initiative in North America | |||||||||||
Restructuring and asset impairment charges | |||||||||||
Restructuring charges | 3 | ||||||||||
Restructuring accrual | |||||||||||
Restructuring charge for employee-related severance costs | 3 | ||||||||||
Employee Severance related costs | Other employee-related severance | |||||||||||
Restructuring accrual | |||||||||||
Restructuring charge for employee-related severance costs | 3 | ||||||||||
Employee Severance related costs | Prior year restructuring activities | |||||||||||
Restructuring accrual | |||||||||||
Restructuring charge for employee-related severance costs | (2) | ||||||||||
Employee Severance related costs | Optimization Initiative Of North And South America | |||||||||||
Restructuring and asset impairment charges | |||||||||||
Restructuring charges | 6 | ||||||||||
Restructuring accrual | |||||||||||
Restructuring charge for employee-related severance costs | 6 | ||||||||||
Non employee severance costs | Finance transformation initiative in North America | |||||||||||
Restructuring and asset impairment charges | |||||||||||
Restructuring charges | $ 3 | ||||||||||
Employee Severance And Other Costs | Finance transformation initiative in North America | Minimum | Forecast | |||||||||||
Restructuring and asset impairment charges | |||||||||||
Restructuring charges | 1 | ||||||||||
Employee Severance And Other Costs | Finance transformation initiative in North America | Maximum | Forecast | |||||||||||
Restructuring and asset impairment charges | |||||||||||
Restructuring charges | $ 2 | ||||||||||
Employee Severance And Other Costs | IT transformation | |||||||||||
Restructuring and asset impairment charges | |||||||||||
Restructuring charges | 11 | ||||||||||
Facility Closing | Port Colborne Ontario Canada Plant | |||||||||||
Restructuring and asset impairment charges | |||||||||||
Restructuring charges | 2 | ||||||||||
Facility Closing | Plant Closing In Trombudo Central And Conchal | |||||||||||
Restructuring and asset impairment charges | |||||||||||
Restructuring charges | $ 12 | ||||||||||
Facility Closing | Port Colborne Ontario Canada Plant | |||||||||||
Restructuring and asset impairment charges | |||||||||||
Restructuring charges | $ 2 |
Financial Instruments, Deriva47
Financial Instruments, Derivatives and Hedging Activities (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Financial instruments, derivatives and hedging activities | ||||
Accumulated gains (losses) from derivative instruments, net of tax effect | $ (1,013) | $ (1,071) | $ (1,102) | $ (782) |
Carrying amount of fair value adjustment related to hedged fixed rate instrument debt instrument | 1 | 3 | ||
Senior Notes 4.625 Percent Due November 1, 2020 | ||||
Financial instruments, derivatives and hedging activities | ||||
Debt, face amount | $ 400 | |||
Commodity Contracts | Minimum | ||||
Financial instruments, derivatives and hedging activities | ||||
Maturity period of price risk derivative | 12 months | |||
Commodity Contracts | Maximum | ||||
Financial instruments, derivatives and hedging activities | ||||
Maturity period of price risk derivative | 24 months | |||
Treasury Lock | ||||
Foreign currency hedging | ||||
Derivative notional amount | $ 0 | 0 | ||
Cash Flow Hedging | Commodity Contracts | ||||
Financial instruments, derivatives and hedging activities | ||||
Accumulated gains (losses) from derivative instruments, net of tax effect | (12) | |||
Accumulated gains (losses) from derivative instruments, net income tax effect | 7 | |||
Cash Flow Hedging | Treasury Lock | ||||
Financial instruments, derivatives and hedging activities | ||||
Accumulated gains (losses) from derivative instruments, net of tax effect | (2) | (4) | ||
Accumulated gains (losses) from derivative instruments, net income tax effect | 1 | 2 | ||
Cash Flow Hedging | Foreign Exchange Forward | ||||
Financial instruments, derivatives and hedging activities | ||||
Accumulated gains (losses) from derivative instruments, net of tax effect | 1 | |||
Accumulated gains (losses) from derivative instruments, net income tax effect | (1) | |||
Fair Value Hedging | ||||
Financial instruments, derivatives and hedging activities | ||||
Fair value of interest rate derivatives | $ 1 | 3 | ||
Fair Value Hedging | Interest Rate Swap | Senior Notes 4.625 Percent Due November 1, 2020 | ||||
Financial instruments, derivatives and hedging activities | ||||
Debt, fixed interest rate (as a percent) | 4.625% | |||
Debt, face amount | $ 200 | |||
Debt, floating rate of interest basis | six-month U.S. LIBOR | |||
Fair Value Hedging | Foreign Exchange Forward | ||||
Financial instruments, derivatives and hedging activities | ||||
Fair value of assets | $ 11 | 5 | ||
Fair Value Hedging | Foreign Exchange Forward | Short | ||||
Foreign currency hedging | ||||
Derivative notional amount | 447 | 432 | ||
Fair Value Hedging | Foreign Exchange Forward | Long | ||||
Foreign currency hedging | ||||
Derivative notional amount | $ 121 | $ 227 |
Financial Instruments, Deriva48
Financial Instruments, Derivatives and Hedging Activities Balance Sheet Location (Details) lb in Millions, gal in Millions, bu in Millions, MMBTU in Millions, $ in Millions | Dec. 31, 2017USD ($)MMBTUlbgalbu | Dec. 31, 2016USD ($) |
Corn Commodity | ||
Fair value of commodity contracts | ||
Futures contract (in bushels for corn and gallons for ethanol) | bu | 92 | |
Soy Bean Oil | ||
Fair value of commodity contracts | ||
Soybean oil futures contract (in pounds) | lb | 16 | |
Natural Gas Commodity | ||
Fair value of commodity contracts | ||
Natural gas futures contract (in mmbtu) | MMBTU | 35 | |
Ethanol Commodity | ||
Fair value of commodity contracts | ||
Futures contract (in bushels for corn and gallons for ethanol) | gal | 4 | |
Designated as Hedging Instrument | ||
Fair value of commodity contracts | ||
Fair value of assets | $ 14 | $ 39 |
Fair value of liabilities | 31 | 27 |
Designated as Hedging Instrument | Commodity and Foreign Currency Contracts | Accounts Receivable, Net | ||
Fair value of commodity contracts | ||
Fair value of assets | 11 | 31 |
Designated as Hedging Instrument | Commodity and Foreign Currency Contracts | Accounts Payable and Accrued Liabilities | ||
Fair value of commodity contracts | ||
Fair value of liabilities | 23 | 25 |
Designated as Hedging Instrument | Commodity, foreign currency, and interest rate contracts | Other Assets | ||
Fair value of commodity contracts | ||
Fair value of assets | 3 | 8 |
Designated as Hedging Instrument | Commodity, foreign currency, and interest rate contracts | Non Current Liabilities | ||
Fair value of commodity contracts | ||
Fair value of liabilities | $ 8 | $ 2 |
Financial Instruments, Deriva49
Financial Instruments, Derivatives and Hedging Activities Contracts (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Gains or losses on derivatives | |||
Amount of Gains (Losses) Recognized in OCI on Derivatives | $ (16) | $ (17) | $ (61) |
Amount of Gains (Losses) Reclassified from AOCI into Income | (6) | (49) | (46) |
Commodity Contracts | |||
Gains or losses on derivatives | |||
Amount of Gains (Losses) Recognized in OCI on Derivatives | (22) | (15) | (61) |
Commodity Contracts | Cost of Sales | |||
Gains or losses on derivatives | |||
Amount of Gains (Losses) Reclassified from AOCI into Income | (5) | (45) | (43) |
Foreign Currency Contracts | |||
Gains or losses on derivatives | |||
Amount of Gains (Losses) Recognized in OCI on Derivatives | 6 | (2) | |
Foreign Currency Contracts | Net sales | |||
Gains or losses on derivatives | |||
Amount of Gains (Losses) Reclassified from AOCI into Income | 1 | (2) | |
Interest Rate Contract | Financing Costs, Net | |||
Gains or losses on derivatives | |||
Amount of Gains (Losses) Reclassified from AOCI into Income | (2) | $ (2) | $ (3) |
Cash Flow Hedging | Commodity Contracts | |||
Gains or losses on derivatives | |||
Loss expected to be reclassified into earnings during the next twelve months on settled commodity hedging contracts, net of tax | (9) | ||
Loss expected to be reclassified into earnings during the next twelve months on settled commodity hedging contracts, income tax effect | 5 | ||
Cash Flow Hedging | Foreign Currency Contracts | |||
Gains or losses on derivatives | |||
Gains expected to be reclassified into earnings during the next twelve months on settled foreign currency hedges, net of tax | 1 | ||
Gains expected to be reclassified during the next twelve months on settled foreign currency hedges, income tax effect | (1) | ||
Cash Flow Hedging | Treasury Lock | |||
Gains or losses on derivatives | |||
Loss expected to be reclassified into earnings during the next twelve months on settled T-Locks, net of tax | (1) | ||
Loss expected to be reclassified into earnings during the next twelve months on settled T-Locks, income tax effect | $ 1 |
Financial Instruments, Deriva50
Financial Instruments, Derivatives and Hedging Activities Recurring And Nonrecurring (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Fair value of assets and liabilities | ||
Long-term debt | $ 1,845 | $ 1,929 |
Estimate of Fair Value Measurement | ||
Fair value of assets and liabilities | ||
Available for sale securities | 10 | 7 |
Derivative assets | 14 | 39 |
Derivative liabilities | 31 | 27 |
Long-term debt | 1,845 | 1,929 |
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 | ||
Fair value of assets and liabilities | ||
Available for sale securities | 10 | 7 |
Derivative assets | 3 | 6 |
Derivative liabilities | 11 | 11 |
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2 | ||
Fair value of assets and liabilities | ||
Derivative assets | 11 | 33 |
Derivative liabilities | 20 | 16 |
Long-term debt | $ 1,845 | $ 1,929 |
Financial Instruments, Deriva51
Financial Instruments, Derivatives and Hedging Activities Debt Instruments (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 | Sep. 22, 2016 |
Long-term debt | |||
Carrying amount | $ 1,744 | $ 1,850 | |
Long-term debt | 1,845 | 1,929 | |
Carrying Amount of Fair Value Adjustment Hedged Fixed Rate Debt | 1 | 3 | |
Fair value adjustment related to hedged fixed rate debt instrument | 1,744 | 1,850 | |
Senior Notes 3.2 Percent Due October 1, 2026 | |||
Long-term debt | |||
Carrying amount | 496 | 496 | |
Long-term debt | $ 492 | $ 482 | |
Debt, interest rate (as a percent) | 3.20% | 3.20% | 3.20% |
Senior Notes 4.625 Percent Due November 1, 2020 | |||
Long-term debt | |||
Carrying amount | $ 398 | $ 398 | |
Long-term debt | $ 421 | $ 428 | |
Debt, interest rate (as a percent) | 4.625% | 4.625% | |
Senior Notes 1.8 Percent Due September 25, 2017 | |||
Long-term debt | |||
Carrying amount | $ 299 | ||
Long-term debt | $ 301 | ||
Debt, interest rate (as a percent) | 1.80% | 1.80% | |
Senior Notes 6.0 Percent Due April 15, 2017 | |||
Long-term debt | |||
Carrying amount | $ 200 | ||
Long-term debt | $ 202 | ||
Debt, interest rate (as a percent) | 6.00% | 6.00% | |
Senior Notes 5.62 Percent Due March 25, 2020 | |||
Long-term debt | |||
Carrying amount | $ 200 | $ 200 | |
Long-term debt | $ 212 | $ 217 | |
Debt, interest rate (as a percent) | 5.62% | 5.62% | |
Term loan credit agreement due April 25, 2019 | |||
Long-term debt | |||
Carrying amount | $ 395 | ||
Long-term debt | $ 395 |
Financing Arrangements (Details
Financing Arrangements (Details) $ in Millions | Jan. 16, 2018USD ($) | Oct. 25, 2017USD ($) | Aug. 18, 2017USD ($)item | Dec. 31, 2017USD ($) | Sep. 22, 2016USD ($) |
Long-term debt | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,000 | ||||
Domestic Line of Credit | |||||
Long-term debt | |||||
Additional increase in borrowing capacity of the line of credit available at the entity's option | $ 500 | ||||
Debt, floating rate of interest basis | LIBOR | ||||
Foreign Line of Credit | |||||
Long-term debt | |||||
Unused operating lines of credit | $ 488 | ||||
Senior Notes 1.8 Percent Due September 25 2017 | |||||
Long-term debt | |||||
Repayments of debt | $ 300 | ||||
Term loan credit agreement | |||||
Long-term debt | |||||
Number of borrowings | item | 3 | ||||
Repayments of debt | $ 185 | $ 25 | |||
Line of Credit Facility, Maximum Borrowing Capacity | $ 500 | ||||
Aggregate principal Amount | $ 420 | ||||
Term of the credit agreement | 18 months |
Financing Arrangements (Detai53
Financing Arrangements (Details) - USD ($) | Oct. 11, 2016 | Sep. 22, 2016 | Dec. 31, 2017 | Oct. 25, 2017 | Aug. 18, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||||||
Fair value adjustment related to hedged fixed rate debt | $ 1,000,000 | $ 3,000,000 | ||||
Long-term debt | 1,744,000,000 | 1,850,000,000 | ||||
Short-term borrowings | 120,000,000 | 106,000,000 | ||||
Long-term Debt, Total | $ 1,864,000,000 | $ 1,956,000,000 | ||||
Line of credit facility, maximum borrowing capacity | $ 1,000,000,000 | |||||
Senior Notes 3.2 Percent Due October 1, 2026 | ||||||
Debt Instrument [Line Items] | ||||||
Debt, interest rate (as a percent) | 3.20% | 3.20% | 3.20% | |||
Aggregate principal Amount | $ 500,000,000 | |||||
Long-term debt | $ 496,000,000 | $ 496,000,000 | ||||
Net proceeds from sale of the notes | 497,000,000 | |||||
Term loan credit agreement due April 25, 2019 | ||||||
Debt Instrument [Line Items] | ||||||
Long-term debt | $ 395,000,000 | |||||
Repayments of Long-term Debt | 350,000,000 | |||||
Senior Notes 4.625 Percent Due November 1, 2020 | ||||||
Debt Instrument [Line Items] | ||||||
Debt, interest rate (as a percent) | 4.625% | 4.625% | ||||
Aggregate principal Amount | $ 400,000,000 | |||||
Long-term debt | $ 398,000,000 | $ 398,000,000 | ||||
Senior Notes 1.8 Percent Due September 25, 2017 | ||||||
Debt Instrument [Line Items] | ||||||
Debt, interest rate (as a percent) | 1.80% | 1.80% | ||||
Long-term debt | $ 299,000,000 | |||||
Senior Notes 6.0 Percent Due April 15, 2017 | ||||||
Debt Instrument [Line Items] | ||||||
Debt, interest rate (as a percent) | 6.00% | 6.00% | ||||
Long-term debt | $ 200,000,000 | |||||
Senior Notes 5.62 Percent Due March 25, 2020 | ||||||
Debt Instrument [Line Items] | ||||||
Debt, interest rate (as a percent) | 5.62% | 5.62% | ||||
Long-term debt | $ 200,000,000 | $ 200,000,000 | ||||
Term loan credit agreement | ||||||
Debt Instrument [Line Items] | ||||||
Aggregate principal Amount | $ 420,000,000 | |||||
Line of credit facility, maximum borrowing capacity | $ 500,000,000 | |||||
Revolving Credit Agreement | ||||||
Debt Instrument [Line Items] | ||||||
Payment of borrowings under revolving credit facility | $ 52,000,000 | |||||
Borrowings outstanding | $ 0 | |||||
Line of credit facility, maximum borrowing capacity | $ 1,000,000,000 | |||||
Debt Instrument, Term | 5 years |
Financing Arrangements (Detai54
Financing Arrangements (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Long-term debt | ||
Fair value adjustment related to hedged fixed rate debt | $ 1 | $ 3 |
Long-term debt | 1,744 | 1,850 |
Long-term debt maturities | ||
2,020 | 600 | |
2,026 | 500 | |
2,037 | 250 | |
Guaranteed obligations of consolidated subsidiaries | $ 56 | 121 |
Senior Notes 1.8 Percent Due September 25, 2017 | ||
Long-term debt | ||
Long-term debt | 299 | |
Senior Notes 6.0 Percent Due April 15, 2017 | ||
Long-term debt | ||
Long-term debt | $ 200 |
Leases (Details)
Leases (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Leases | |||
Rental expense | $ 51 | $ 53 | $ 52 |
Minimum lease payments due on leases | |||
2,018 | 45 | ||
2,019 | 40 | ||
2,020 | 31 | ||
2,021 | 25 | ||
2,022 | 20 | ||
Balance thereafter | $ 36 |
Income Taxes - Provision for in
Income Taxes - Provision for income taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income before income taxes: | |||
United States | $ 226 | $ 176 | $ 109 |
Foreign | 543 | 566 | 490 |
Income before income taxes | 769 | 742 | 599 |
Current tax expense | |||
US federal | (13) | 95 | 26 |
State and local | 4 | 8 | 3 |
Foreign | 179 | 148 | 164 |
Total current tax expense | 170 | 251 | 193 |
Deferred tax expense (benefit): | |||
US federal | 77 | 13 | (8) |
State and local | 4 | 1 | (1) |
Foreign | (14) | (19) | 3 |
Total deferred tax expense (benefit) | 67 | (5) | (6) |
Total provision for income taxes | 237 | 246 | $ 187 |
Deferred tax assets attributable to: | |||
Employee benefit accruals | 20 | 39 | |
Pension and postretirement plans | 20 | 30 | |
Derivative contracts | 5 | 3 | |
Net operating loss carryforwards | 32 | 18 | |
Foreign tax credit carryforwards | 4 | ||
Other | 24 | ||
Gross deferred tax assets | 77 | 118 | |
Valuation allowance | (34) | (21) | |
Net deferred tax assets | 43 | 97 | |
Deferred tax liabilities attributable to: | |||
Property, plant and equipment | 185 | 206 | |
Identified intangibles | 37 | 55 | |
Other | 11 | ||
Gross deferred tax liabilities | 233 | 261 | |
Net deferred tax liabilities | 190 | 164 | |
Valuation allowance on foreign subsidiaries net deferred tax assets | 2 | 2 | |
State and Local Jurisdiction | |||
Deferred tax assets attributable to: | |||
Net operating loss carryforwards | 9 | 8 | |
Deferred tax liabilities attributable to: | |||
Loss carryforwards, valuation allowance | 9 | 8 | |
Credit carryforwards, valuation allowance | 2 | 2 | |
Foreign Tax Authority | |||
Deferred tax assets attributable to: | |||
Net operating loss carryforwards | 23 | ||
Deferred tax liabilities attributable to: | |||
Loss carryforwards, valuation allowance | $ 21 | $ 9 |
Income Taxes - Tax Cuts and Job
Income Taxes - Tax Cuts and Jobs Act (Details) $ in Millions | Jan. 01, 2018 | Dec. 31, 2017USD ($) | Dec. 31, 2017USD ($)item | Dec. 31, 2016 | Dec. 31, 2015 |
Provision for tax at statutory rate (as a percent) | 35.00% | 35.00% | 35.00% | ||
Foreign subsidiary dividends received deduction percentage | 100.00% | ||||
Number of items | item | 4 | ||||
One-time transition tax | $ 21 | ||||
Remeasurement of deferred tax assets and liabilities | (38) | ||||
Net impact of provision for taxes on unremitted earnings | 33 | ||||
Other items, net | 7 | ||||
Net impact of the TCJA on our 2017 income tax expense | $ 23 | $ 23 | |||
Net impact of transition tax | 2.70% | ||||
Net impact of U.S. deferred tax remeasurement | (4.90%) | ||||
Net impact of provision for taxes on unremitted earnings | 4.30% | 0.50% | |||
TCJA other items, net percentage | 0.90% | ||||
Forecast | |||||
Provision for tax at statutory rate (as a percent) | 21.00% |
Income Taxes - Effective tax ra
Income Taxes - Effective tax rate (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of the US federal statutory tax rate to the Company's effective tax rate | ||||
Provision for tax at statutory rate (as a percent) | 35.00% | 35.00% | 35.00% | |
Tax rate difference on foreign income (as a percent) | (5.60%) | (5.50%) | (5.80%) | |
State and local taxes - net (as a percent) | 0.70% | 0.30% | 0.30% | |
Tax impact of fluctuations in Mexican Pesos to US Dollar | (0.50%) | 2.40% | 2.90% | |
Net impact of U.S. foreign tax credits | 0.30% | (2.30%) | 0.90% | |
Net impact of valuation allowance in Argentina | 2.00% | 1.00% | ||
Net impact of transition tax | 2.70% | |||
Net impact of U.S. deferred tax remeasurement | (4.90%) | |||
Net impact of provision for taxes on unremitted earnings | 4.30% | 0.50% | ||
Other items - net (as a percent) | (1.90%) | (1.50%) | (2.10%) | |
Provision at effective tax rate (as a percent) | 30.80% | 33.10% | 31.20% | |
Tax impact of change in Mexican Pesos to US Dollars | $ 4 | $ 18 | $ 17 | |
Tax impact of change in Mexican Pesos to US Dollars, percentage points | 0.50% | 2.40% | 2.90% | |
Pre-tax gain on foreign currency exchange amounts | $ 0 | $ 0 | ||
Increase in valuation allowance of foreign subsidiary net deferred tax assets | $ 16 | $ 7 | ||
Percentage increase in valuation allowance of foreign subsidiary net deferred tax assets | 2 | 1 | ||
Net tax impact of US / Canada settlement | $ 10 | $ 24 | ||
Net tax impact of US / Canada settlement percentage | (1.30%) | 3.20% | ||
Net tax impact of US / Canada settlement reserve based on effective tax rate in 2016 | $ 7 | |||
Net tax impact of US / Canada settlement based on effective tax rate in 2016 percentage | 1.00% | |||
Income tax provision (benefit) that offset income tax indemnification income | $ 7 | $ 4 | ||
Undistributed earnings on foreign subsidiaries tax provision | 33 | |||
Undistributed earnings of foreign subsidiaries | 2,700 | |||
Balance at January 1 | 86 | 12 | ||
Additions for tax positions related to prior years | 72 | |||
Reductions for tax positions related to prior years | (9) | |||
Additions based on tax positions related to the current year | 12 | 12 | ||
Settlements | (58) | |||
Reductions related to a lapse in the statute of limitations | (1) | (1) | ||
Balance at December 31 | 39 | 86 | $ 12 | |
Unrecognized tax benefit that, if recognized, could affect the effective tax rate in future periods | 15 | |||
Remaining unrecognized tax benefits | 24 | |||
Unrecognized tax benefit, income tax receivable | 23 | |||
Unrecognized tax foreign benefit that would be created as part of Canada and US process | 1 | |||
Settlement of claims with Canadian tax authority | 63 | |||
Interest expense accrued, net of interest income | $ 2 | 9 | ||
MEXICO | ||||
Reconciliation of the US federal statutory tax rate to the Company's effective tax rate | ||||
Provision for tax at statutory rate (as a percent) | 30.00% | |||
CANADA | ||||
Reconciliation of the US federal statutory tax rate to the Company's effective tax rate | ||||
Provision for tax at statutory rate (as a percent) | 25.00% | |||
PAKISTAN | ||||
Reconciliation of the US federal statutory tax rate to the Company's effective tax rate | ||||
Provision for tax at statutory rate (as a percent) | 30.00% | |||
BRAZIL | ||||
Reconciliation of the US federal statutory tax rate to the Company's effective tax rate | ||||
Provision for tax at statutory rate (as a percent) | 34.00% | |||
2,016 | ||||
Reconciliation of the US federal statutory tax rate to the Company's effective tax rate | ||||
Net tax impact of US / Canada settlement income tax expense | 70 | |||
Net tax impact of US / Canada settlement income tax benefit | $ 46 | |||
Net tax impact of US / Canada settlement percentage | 3.20% | |||
Akzo Nobel NV | ||||
Reconciliation of the US federal statutory tax rate to the Company's effective tax rate | ||||
Income tax provision (benefit) that offset income tax indemnification income | (4) | $ 7 | ||
Pre-acquisition audit result adjustment, tax | (3) | 5 | ||
Pre-acquisition audit result adjustment, interest | $ (1) | $ 2 | ||
Pre-acquisition audit result adjustment (as a percent) | (0.70%) | 1.30% |
Benefit Plans - Detail (Details
Benefit Plans - Detail (Details) $ in Millions | 1 Months Ended | 12 Months Ended | |||
Apr. 30, 2016USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
US | |||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||||
Service cost | $ 8 | ||||
Interest cost | 14 | ||||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | |||||
Service cost | 8 | ||||
Interest cost | 14 | ||||
Expected return on plan assets | (24) | ||||
Amortization of actuarial loss | 1 | ||||
Settlement loss | (1) | ||||
Net periodic benefit cost/Net postretirement benefit costs | $ 1 | (2) | |||
Defined Benefit Plan, Amounts Recognized in Other Comprehensive Income (Loss) [Abstract] | |||||
Net actuarial loss (gain) | 10 | ||||
Prior service cost | (6) | ||||
Amortization of actuarial loss | (1) | (1) | |||
Settlement gain | 1 | ||||
Total recorded in other comprehensive income | 3 | ||||
Net periodic benefit cost/Net postretirement benefit costs | 1 | (2) | |||
Non-US | |||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||||
Service cost | 4 | ||||
Interest cost | 12 | ||||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | |||||
Service cost | 4 | ||||
Interest cost | 12 | ||||
Expected return on plan assets | (13) | ||||
Amortization of actuarial loss | 3 | ||||
Net periodic benefit cost/Net postretirement benefit costs | 6 | 6 | |||
Defined Benefit Plan, Amounts Recognized in Other Comprehensive Income (Loss) [Abstract] | |||||
Net actuarial loss (gain) | 6 | (18) | |||
Prior service cost | (1) | ||||
Amortization of actuarial loss | (2) | (3) | |||
Total recorded in other comprehensive income | 3 | (21) | |||
Net periodic benefit cost/Net postretirement benefit costs | 6 | 6 | |||
Pension Plan | |||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||||
Balance at the beginning of the period | $ 603 | $ 555 | |||
Balance at the end of the period | 603 | 555 | |||
Pension Plan | US | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Reduction of benefit obligation | (5) | ||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||||
Balance at the beginning of the period | 367 | 359 | |||
Balance at the beginning of the period | 393 | 367 | |||
Service cost | 6 | 6 | |||
Interest cost | 13 | 14 | |||
Benefits paid | (23) | (16) | |||
Actuarial loss (gain) | 30 | 10 | |||
Curtailment / settlement / amendments | (6) | ||||
Balance at the end of the period | 393 | 367 | |||
Defined Benefit Plan, Benefit Obligation, Ending Balance | 367 | 359 | |||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | |||||
Balance at the beginning of the period | $ 404 | 368 | 354 | ||
Actual return on plan assets | 59 | 20 | |||
Cash contributions to defined benefit pension plan | 10 | ||||
Benefits paid | (23) | (16) | |||
Balance at the end of the period | 404 | 368 | $ 354 | ||
Funded status | 11 | 1 | |||
Defined Benefit Plan, Amounts Recognized in Balance Sheet [Abstract] | |||||
Non-current asset | 23 | 12 | |||
Current liabilities | (2) | (1) | |||
Non-current liabilities | (10) | (10) | |||
Net asset (liability) recognized | 11 | 1 | |||
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), before Tax [Abstract] | |||||
Net actuarial loss | 21 | 28 | |||
Prior service cost | (6) | (6) | |||
Net amount recognized | 15 | 22 | |||
Defined Benefit Plan, Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets [Abstract] | |||||
Projected benefit obligation | 12 | 11 | |||
Accumulated benefit obligation | 11 | 10 | |||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | |||||
Service cost | 6 | 6 | |||
Interest cost | 13 | 14 | |||
Expected return on plan assets | (21) | (20) | |||
Amortization of actuarial loss | 1 | ||||
Amortization of prior service credit | (1) | ||||
Net periodic benefit cost/Net postretirement benefit costs | (3) | 1 | |||
Amount related to the amortization of the entity's accumulated actuarial loss included in accumulated other comprehensive loss that will be recognized in net pension expense in next fiscal year | 1 | ||||
Defined Benefit Plan, Amounts Recognized in Other Comprehensive Income (Loss) [Abstract] | |||||
Net actuarial loss (gain) | (7) | ||||
Amortization of prior service credit | 1 | ||||
Total recorded in other comprehensive income | (6) | ||||
Net periodic benefit cost/Net postretirement benefit costs | $ (3) | $ 1 | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | |||||
Discount rate (as a percent) | 3.70% | 4.30% | |||
Rate of compensation increase (as a percent) | 4.42% | 4.54% | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | |||||
Discount rate (as a percent) | 4.30% | 4.30% | 4.00% | ||
Expected long-term return on plan assets (as a percent) | 5.75% | 5.75% | 7.00% | ||
Rate of compensation increase (as a percent) | 4.54% | 4.71% | 4.31% | ||
Pension Plan | US | Pro Forma | |||||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | |||||
Expected long-term return on plan assets (as a percent) | 5.30% | ||||
Pension Plan | US | Minimum | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Percent of base salary, bonus and overtime credited to participating employees' accounts by the Company | 3.00% | ||||
Pension Plan | US | Maximum | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Percent of base salary, bonus and overtime credited to participating employees' accounts by the Company | 10.00% | ||||
Pension Plan | Non-US | |||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||||
Balance at the beginning of the period | $ 223 | $ 219 | |||
Balance at the beginning of the period | $ 248 | 223 | |||
Service cost | 3 | 3 | |||
Interest cost | 11 | 10 | |||
Benefits paid | (12) | (15) | |||
Actuarial loss (gain) | 7 | 6 | |||
Curtailment / settlement / amendments | (5) | ||||
Foreign currency translation | 16 | 5 | |||
Balance at the end of the period | 248 | 223 | |||
Defined Benefit Plan, Benefit Obligation, Ending Balance | 223 | $ 219 | |||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | |||||
Balance at the beginning of the period | $ 235 | 211 | 206 | ||
Actual return on plan assets | 17 | 11 | |||
Cash contributions to defined benefit pension plan | 5 | 7 | |||
Benefits paid | (12) | (15) | |||
Plan settlements | (5) | ||||
Foreign currency translation | 14 | 7 | |||
Balance at the end of the period | 235 | 211 | $ 206 | ||
Funded status | (13) | (12) | |||
Defined Benefit Plan, Amounts Recognized in Balance Sheet [Abstract] | |||||
Non-current asset | 37 | 29 | |||
Current liabilities | (1) | (1) | |||
Non-current liabilities | (49) | (40) | |||
Net asset (liability) recognized | (13) | (12) | |||
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), before Tax [Abstract] | |||||
Net actuarial loss | 55 | 52 | |||
Transition obligation | 1 | 1 | |||
Prior service cost | (1) | (1) | |||
Net amount recognized | 55 | 52 | |||
Defined Benefit Plan, Pension Plans with Accumulated Benefit Obligations in Excess of Plan Assets [Abstract] | |||||
Projected benefit obligation | 51 | 43 | |||
Accumulated benefit obligation | 41 | 36 | |||
Fair value of plan assets | 2 | 2 | |||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | |||||
Service cost | 3 | 3 | |||
Interest cost | 11 | 10 | |||
Expected return on plan assets | (10) | (10) | |||
Amortization of actuarial loss | 2 | 2 | |||
Settlement loss | 1 | ||||
Net periodic benefit cost/Net postretirement benefit costs | 6 | 6 | |||
Amount related to the amortization of the entity's accumulated actuarial loss included in accumulated other comprehensive loss that will be recognized in net pension expense in next fiscal year | (2) | ||||
Defined Benefit Plan, Amounts Recognized in Other Comprehensive Income (Loss) [Abstract] | |||||
Net actuarial loss (gain) | (3) | ||||
Amortization of actuarial loss | (2) | ||||
Total recorded in other comprehensive income | (5) | ||||
Net periodic benefit cost/Net postretirement benefit costs | $ 6 | $ 6 | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | |||||
Discount rate (as a percent) | 4.02% | 4.34% | |||
Rate of compensation increase (as a percent) | 3.58% | 3.62% | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | |||||
Discount rate (as a percent) | 4.34% | 4.57% | 4.47% | ||
Expected long-term return on plan assets (as a percent) | 5.29% | 5.41% | 6.48% | ||
Rate of compensation increase (as a percent) | 3.62% | 3.73% | 3.76% | ||
Pension Plan | Canadian Plans | |||||
Defined Benefit Plan Disclosure [Line Items] | |||||
Number of plans amended | item | 1 | ||||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | |||||
Settlement loss | $ 1 | ||||
Settlement/curtailment | $ 5 | ||||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | |||||
Expected long-term return on plan assets (as a percent) | 4.76% | ||||
Pension Plan | Canadian Plans | Pro Forma | |||||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | |||||
Expected long-term return on plan assets (as a percent) | 3.86% | ||||
Postemployment Retirement Benefits | |||||
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |||||
Balance at the beginning of the period | $ 70 | $ 67 | $ 64 | ||
Service cost | 1 | 1 | $ 1 | ||
Interest cost | 3 | 2 | 3 | ||
Benefits paid | (4) | (4) | |||
Employee contributions | 1 | ||||
Actuarial loss (gain) | 2 | 2 | |||
Foreign currency translation | 2 | ||||
Defined Benefit Plan, Benefit Obligation, Ending Balance | 70 | 67 | 64 | ||
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | |||||
Funded status | (70) | (67) | |||
Defined Benefit Plan, Amounts Recognized in Balance Sheet [Abstract] | |||||
Current liabilities | (4) | (4) | |||
Non-current liabilities | (66) | (63) | |||
Net asset (liability) recognized | (70) | (67) | |||
Pension and Other Postretirement Benefit Plans, Accumulated Other Comprehensive Income (Loss), before Tax [Abstract] | |||||
Net actuarial loss | 11 | 7 | |||
Prior service cost | (6) | (8) | |||
Net amount recognized | 5 | (1) | |||
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | |||||
Service cost | 1 | 1 | 1 | ||
Interest cost | 3 | 2 | 3 | ||
Amortization of prior service credit | (3) | (2) | (2) | ||
Net periodic benefit cost/Net postretirement benefit costs | 1 | 1 | 2 | ||
Defined Benefit Plan, Amounts Recognized in Other Comprehensive Income (Loss) [Abstract] | |||||
Net actuarial loss (gain) | 2 | 2 | (2) | ||
Prior service cost | 2 | ||||
Amortization of prior service credit | 3 | 2 | 2 | ||
Total recorded in other comprehensive income | 5 | 4 | 2 | ||
Net periodic benefit cost/Net postretirement benefit costs | 1 | 1 | 2 | ||
Total recorded in other comprehensive income and net periodic benefit cost | $ 6 | $ 5 | $ 4 | ||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Benefit Obligation [Abstract] | |||||
Discount rate (as a percent) | 4.92% | 5.42% | |||
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | |||||
Discount rate (as a percent) | 5.46% | 5.30% | 5.70% |
Benefit Plans - Future Benefit
Benefit Plans - Future Benefit Payments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Amounts charged to expense | |||
Amounts charged to expense for defined contribution plans | $ 22 | $ 20 | $ 17 |
Pension Plan | US | |||
Plan assets | |||
Weighted average asset allocation (as a percent) | 100.00% | 100.00% | |
Fair value of plan assets | $ 404 | $ 368 | 354 |
Expected contribution in next fiscal year | 2 | ||
Expected future benefit payments | |||
2,018 | 21 | ||
2,019 | 20 | ||
2,020 | 21 | ||
2,021 | 22 | ||
2,022 | 23 | ||
Years 2023 - 2027 | 124 | ||
Pension Plan | US | US Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 51 | 70 | |
Pension Plan | US | International Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 55 | 68 | |
Pension Plan | US | Long Government Fixed Income Index Bonds | |||
Plan assets | |||
Fair value of plan assets | $ 21 | ||
Amounts charged to expense | |||
Fixed income securities maturity (in years) | 10 years | ||
Pension Plan | US | Long Duration Fixed Income Index Bonds | |||
Plan assets | |||
Fair value of plan assets | $ 273 | $ 227 | |
Amounts charged to expense | |||
Fixed income securities maturity (in years) | 10 years | ||
Pension Plan | US | Cash, Cash Equivalents and Other [Member] | |||
Plan assets | |||
Weighted average asset allocation (as a percent) | 1.00% | 1.00% | |
Fair value of plan assets | $ 3 | ||
Pension Plan | US | Equity Securities | |||
Plan assets | |||
Weighted average asset allocation (as a percent) | 26.00% | 38.00% | |
Pension Plan | US | Debt Securities | |||
Plan assets | |||
Weighted average asset allocation (as a percent) | 73.00% | 61.00% | |
Pension Plan | Non-US | |||
Plan assets | |||
Weighted average asset allocation (as a percent) | 100.00% | 100.00% | |
Fair value of plan assets | $ 235 | $ 211 | $ 206 |
Expected contribution in next fiscal year | 3 | ||
Expected future benefit payments | |||
2,018 | 11 | ||
2,019 | 12 | ||
2,020 | 12 | ||
2,021 | 12 | ||
2,022 | 12 | ||
Years 2023 - 2027 | 70 | ||
Pension Plan | Non-US | US Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 12 | 11 | |
Pension Plan | Non-US | Canada Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 22 | 21 | |
Pension Plan | Non-US | International Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 52 | 49 | |
Pension Plan | Non-US | Real Estate Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 5 | 5 | |
Pension Plan | Non-US | Intermediate Fixed Income Index Funds | |||
Plan assets | |||
Fair value of plan assets | 25 | 21 | |
Pension Plan | Non-US | Long Duration Fixed Income Index Bonds | |||
Plan assets | |||
Fair value of plan assets | $ 84 | $ 72 | |
Pension Plan | Non-US | Cash, Cash Equivalents and Other [Member] | |||
Plan assets | |||
Weighted average asset allocation (as a percent) | 15.00% | 15.00% | |
Pension Plan | Non-US | Cash and Cash Equivalents | |||
Plan assets | |||
Fair value of plan assets | $ 11 | $ 9 | |
Pension Plan | Non-US | Equity Securities | |||
Plan assets | |||
Weighted average asset allocation (as a percent) | 39.00% | 41.00% | |
Pension Plan | Non-US | Debt Securities | |||
Plan assets | |||
Weighted average asset allocation (as a percent) | 46.00% | 44.00% | |
Pension Plan | Non-US | Other Plan Assets | |||
Plan assets | |||
Fair value of plan assets | $ 24 | $ 23 | |
Pension Plan | Fair Value, Inputs, Level 1 | Non-US | |||
Plan assets | |||
Fair value of plan assets | 2 | 1 | |
Pension Plan | Fair Value, Inputs, Level 1 | Non-US | Cash and Cash Equivalents | |||
Plan assets | |||
Fair value of plan assets | 2 | 1 | |
Pension Plan | Fair Value, Inputs, Level 2 | US | |||
Plan assets | |||
Fair value of plan assets | 404 | 368 | |
Pension Plan | Fair Value, Inputs, Level 2 | US | US Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 51 | 70 | |
Pension Plan | Fair Value, Inputs, Level 2 | US | International Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 55 | 68 | |
Pension Plan | Fair Value, Inputs, Level 2 | US | Long Government Fixed Income Index Bonds | |||
Plan assets | |||
Fair value of plan assets | 21 | ||
Pension Plan | Fair Value, Inputs, Level 2 | US | Long Duration Fixed Income Index Bonds | |||
Plan assets | |||
Fair value of plan assets | 273 | 227 | |
Pension Plan | Fair Value, Inputs, Level 2 | US | Cash, Cash Equivalents and Other [Member] | |||
Plan assets | |||
Fair value of plan assets | 4 | 3 | |
Pension Plan | Fair Value, Inputs, Level 2 | Non-US | |||
Plan assets | |||
Fair value of plan assets | 233 | 210 | |
Pension Plan | Fair Value, Inputs, Level 2 | Non-US | US Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 12 | 11 | |
Pension Plan | Fair Value, Inputs, Level 2 | Non-US | Canada Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 22 | 21 | |
Pension Plan | Fair Value, Inputs, Level 2 | Non-US | International Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 52 | 49 | |
Pension Plan | Fair Value, Inputs, Level 2 | Non-US | Real Estate Equity Index Funds | |||
Plan assets | |||
Fair value of plan assets | 5 | 5 | |
Pension Plan | Fair Value, Inputs, Level 2 | Non-US | Intermediate Fixed Income Index Funds | |||
Plan assets | |||
Fair value of plan assets | 25 | 21 | |
Pension Plan | Fair Value, Inputs, Level 2 | Non-US | Long Duration Fixed Income Index Bonds | |||
Plan assets | |||
Fair value of plan assets | 84 | 72 | |
Pension Plan | Fair Value, Inputs, Level 2 | Non-US | Cash and Cash Equivalents | |||
Plan assets | |||
Fair value of plan assets | 9 | 8 | |
Pension Plan | Fair Value, Inputs, Level 2 | Non-US | Other Plan Assets | |||
Plan assets | |||
Fair value of plan assets | $ 24 | $ 23 | |
Pension Plan | Minimum | US | Cash, Cash Equivalents and Other [Member] | |||
Plan assets | |||
Plan assets allocation percentage | 1.00% | ||
Pension Plan | Minimum | US | Equity Securities | |||
Plan assets | |||
Plan assets allocation percentage | 20.00% | ||
Pension Plan | Minimum | US | Fixed Income Securities | |||
Plan assets | |||
Plan assets allocation percentage | 57.00% | ||
Pension Plan | Maximum | US | Cash, Cash Equivalents and Other [Member] | |||
Plan assets | |||
Plan assets allocation percentage | 3.00% | ||
Pension Plan | Maximum | US | Equity Securities | |||
Plan assets | |||
Plan assets allocation percentage | 40.00% | ||
Pension Plan | Maximum | US | Fixed Income Securities | |||
Plan assets | |||
Plan assets allocation percentage | 79.00% |
Benefit Plans (Details)
Benefit Plans (Details) $ in Millions | 12 Months Ended | ||||
Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | |
Multiemployer Plans | |||||
Multiemployer benefit plan that company contributes to | item | 1 | ||||
Multiemployer Plan contributions | $ 13 | $ 14 | $ 12 | ||
Pension Plan | |||||
Benefit obligation | |||||
Balance at the beginning of the period | 555 | ||||
Balance at the end of the period | 603 | 555 | |||
Postemployment Retirement Benefits | |||||
Benefit obligation | |||||
Balance at the beginning of the period | 67 | 64 | |||
Service cost | 1 | 1 | 1 | ||
Interest cost | 3 | 2 | 3 | ||
Actuarial loss (gain) | 2 | 2 | |||
Benefits paid | (4) | (4) | |||
Foreign currency translation | 2 | ||||
Defined Benefit Plan, Benefit Obligation | 67 | 64 | 64 | $ 70 | $ 67 |
Funded status | (70) | (67) | |||
Amounts recognized in the Consolidated Balance Sheets | |||||
Current liabilities | (4) | (4) | |||
Non-current liabilities | (66) | (63) | |||
Net asset (liability) recognized | (70) | (67) | |||
Amounts recognized in Accumulated Other Comprehensive Loss, excluding tax effects, that have not yet been recognized as components of net periodic benefit cost | |||||
Net actuarial loss | 11 | 7 | |||
Prior service cost | (6) | (8) | |||
Net amount recognized | 5 | $ (1) | |||
Components of Net Periodic Benefit Cost | |||||
Service cost | 1 | 1 | 1 | ||
Interest cost | 3 | 2 | 3 | ||
Amortization of prior service credit | (3) | (2) | (2) | ||
Net periodic benefit cost | 1 | 1 | 2 | ||
Total recorded in other comprehensive income and net periodic benefit cost | 6 | 5 | 4 | ||
Amount related to the amortization of prior service cost included in accumulated other comprehensive loss that will be recognized in net pension expense in next fiscal year | $ (2) | ||||
Amounts recorded in other comprehensive income and net periodic benefit cost | |||||
Net actuarial loss (gain) | 2 | 2 | (2) | ||
Prior service cost | 2 | ||||
Amortization of prior service credit | 3 | 2 | 2 | ||
Total recorded in other comprehensive income | 5 | 4 | 2 | ||
Net periodic benefit cost | $ 1 | $ 1 | $ 2 | ||
Weighted average assumptions used to determine the company's obligations | |||||
Discount rate (as a percent) | 4.92% | 5.42% | |||
Weighted average assumptions used to determine the company's net periodic benefit cost | |||||
Discount rate (as a percent) | 5.46% | 5.30% | 5.70% | ||
Sensitivity to Trend Assumptions | |||||
One-percentage point increase, effect on service cost and interest cost components | $ 1 | ||||
One-percentage point increase, effect on year-end benefit obligations | 7 | ||||
One-percentage point decrease, effect on service cost and interest cost components | (1) | ||||
One-percentage point decrease, effect on year-end benefit obligations | (6) | ||||
Expected future benefit payments | |||||
2,018 | $ 4 | ||||
2,019 | 4 | ||||
2,020 | 4 | ||||
2,021 | 4 | ||||
2,022 | 5 | ||||
Years 2023 - 2027 | 24 | ||||
US | |||||
Benefit obligation | |||||
Service cost | $ 8 | ||||
Interest cost | 14 | ||||
Components of Net Periodic Benefit Cost | |||||
Service cost | 8 | ||||
Interest cost | 14 | ||||
Net periodic benefit cost | $ 1 | (2) | |||
Amounts recorded in other comprehensive income and net periodic benefit cost | |||||
Net actuarial loss (gain) | 10 | ||||
Prior service cost | (6) | ||||
Total recorded in other comprehensive income | 3 | ||||
Net periodic benefit cost | 1 | (2) | |||
Total recorded in other comprehensive income and net periodic benefit cost | 4 | (2) | |||
US | Pension Plan | |||||
Benefit obligation | |||||
Balance at the beginning of the period | 367 | 359 | |||
Balance at the beginning of the period | 367 | ||||
Service cost | 6 | 6 | |||
Interest cost | 13 | 14 | |||
Actuarial loss (gain) | 30 | 10 | |||
Benefits paid | (23) | (16) | |||
Defined Benefit Plan, Benefit Obligation | 367 | 359 | $ 359 | $ 367 | |
Balance at the end of the period | 393 | 367 | |||
Funded status | 11 | 1 | |||
Amounts recognized in the Consolidated Balance Sheets | |||||
Current liabilities | (2) | (1) | |||
Non-current liabilities | (10) | (10) | |||
Net asset (liability) recognized | 11 | 1 | |||
Amounts recognized in Accumulated Other Comprehensive Loss, excluding tax effects, that have not yet been recognized as components of net periodic benefit cost | |||||
Net actuarial loss | 21 | 28 | |||
Prior service cost | (6) | (6) | |||
Net amount recognized | 15 | $ 22 | |||
Components of Net Periodic Benefit Cost | |||||
Service cost | 6 | 6 | |||
Interest cost | 13 | 14 | |||
Amortization of prior service credit | (1) | ||||
Net periodic benefit cost | (3) | 1 | |||
Amount related to the amortization of the entity's accumulated actuarial loss included in accumulated other comprehensive loss that will be recognized in net pension expense in next fiscal year | $ 1 | ||||
Amounts recorded in other comprehensive income and net periodic benefit cost | |||||
Net actuarial loss (gain) | (7) | ||||
Amortization of prior service credit | 1 | ||||
Total recorded in other comprehensive income | (6) | ||||
Net periodic benefit cost | (3) | $ 1 | |||
Total recorded in other comprehensive income and net periodic benefit cost | $ (9) | ||||
Weighted average assumptions used to determine the company's obligations | |||||
Discount rate (as a percent) | 3.70% | 4.30% | |||
Weighted average assumptions used to determine the company's net periodic benefit cost | |||||
Discount rate (as a percent) | 4.30% | 4.30% | 4.00% | ||
Expected future benefit payments | |||||
2,018 | $ 21 | ||||
2,019 | 20 | ||||
2,020 | 21 | ||||
2,021 | 22 | ||||
2,022 | 23 | ||||
Years 2023 - 2027 | $ 124 | ||||
US | Postemployment Retirement Benefits | |||||
Assumptions used in measuring benefit obligation | |||||
2017 increase in per capita cost (as a percent) | 6.50% | ||||
Ultimate trend (as a percent) | 4.50% | ||||
Non-US | |||||
Benefit obligation | |||||
Service cost | $ 4 | ||||
Interest cost | 12 | ||||
Components of Net Periodic Benefit Cost | |||||
Service cost | 4 | ||||
Interest cost | 12 | ||||
Net periodic benefit cost | $ 6 | 6 | |||
Amounts recorded in other comprehensive income and net periodic benefit cost | |||||
Net actuarial loss (gain) | 6 | (18) | |||
Prior service cost | (1) | ||||
Total recorded in other comprehensive income | 3 | (21) | |||
Net periodic benefit cost | 6 | 6 | |||
Total recorded in other comprehensive income and net periodic benefit cost | 9 | (15) | |||
Non-US | Pension Plan | |||||
Benefit obligation | |||||
Balance at the beginning of the period | $ 223 | 219 | |||
Balance at the beginning of the period | 223 | ||||
Service cost | 3 | 3 | |||
Interest cost | 11 | 10 | |||
Actuarial loss (gain) | 7 | 6 | |||
Benefits paid | (12) | (15) | |||
Foreign currency translation | 16 | 5 | |||
Defined Benefit Plan, Benefit Obligation | 223 | 219 | $ 219 | $ 223 | |
Balance at the end of the period | 248 | 223 | |||
Funded status | $ (13) | (12) | |||
Amounts recognized in the Consolidated Balance Sheets | |||||
Current liabilities | (1) | (1) | |||
Non-current liabilities | (49) | (40) | |||
Net asset (liability) recognized | (13) | (12) | |||
Amounts recognized in Accumulated Other Comprehensive Loss, excluding tax effects, that have not yet been recognized as components of net periodic benefit cost | |||||
Net actuarial loss | 55 | 52 | |||
Prior service cost | (1) | (1) | |||
Net amount recognized | 55 | $ 52 | |||
Components of Net Periodic Benefit Cost | |||||
Service cost | 3 | 3 | |||
Interest cost | 11 | 10 | |||
Net periodic benefit cost | 6 | 6 | |||
Amount related to the amortization of the entity's accumulated actuarial loss included in accumulated other comprehensive loss that will be recognized in net pension expense in next fiscal year | $ (2) | ||||
Amounts recorded in other comprehensive income and net periodic benefit cost | |||||
Net actuarial loss (gain) | (3) | ||||
Total recorded in other comprehensive income | (5) | ||||
Net periodic benefit cost | 6 | $ 6 | |||
Total recorded in other comprehensive income and net periodic benefit cost | $ 1 | ||||
Weighted average assumptions used to determine the company's obligations | |||||
Discount rate (as a percent) | 4.02% | 4.34% | |||
Weighted average assumptions used to determine the company's net periodic benefit cost | |||||
Discount rate (as a percent) | 4.34% | 4.57% | 4.47% | ||
Expected future benefit payments | |||||
2,018 | $ 11 | ||||
2,019 | 12 | ||||
2,020 | 12 | ||||
2,021 | 12 | ||||
2,022 | 12 | ||||
Years 2023 - 2027 | $ 70 | ||||
Canadian Plans | Postemployment Retirement Benefits | |||||
Assumptions used in measuring benefit obligation | |||||
2017 increase in per capita cost (as a percent) | 5.54% | ||||
Ultimate trend (as a percent) | 4.50% | ||||
BRAZIL | Postemployment Retirement Benefits | |||||
Assumptions used in measuring benefit obligation | |||||
2017 increase in per capita cost (as a percent) | 8.41% | ||||
Ultimate trend (as a percent) | 8.41% |
Supplementary Information - Con
Supplementary Information - Consolidated Balance Sheets (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Accounts receivable net: | ||
Accounts receivable trade | $ 760 | $ 751 |
Accounts receivable other | 209 | 178 |
Allowance for doubtful accounts | (8) | (6) |
Total accounts receivable — net | 961 | 923 |
Inventories: | ||
Finished and in process | 495 | 478 |
Raw materials | 278 | 260 |
Manufacturing supplies and other | 50 | 51 |
Total inventories | 823 | 789 |
Accrued liabilities: | ||
Compensation-related costs | 101 | 107 |
Income taxes payable | 22 | 40 |
Unrecognized tax benefits | 72 | |
Dividends payable | 44 | 36 |
Accrued interest | 15 | 19 |
Taxes payable other than income taxes | 37 | 36 |
Other | 125 | 122 |
Total accrued liabilities | 344 | 432 |
Non-current liabilities: | ||
Employees pension, indemnity and postretirement | 121 | 109 |
Other | 106 | 49 |
Total non-current liabilities | $ 227 | $ 158 |
Supplementary Information - C63
Supplementary Information - Consolidated Statements of Income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Other income -net: | |||
Insurance settlement | $ 9 | ||
Value-added tax recovery | 6 | $ 5 | $ 4 |
Gain from sale of land | 10 | ||
Gain on sale of plant | 10 | ||
Litigation settlement | (7) | ||
Income tax indemnification expense | (4) | ||
Other | 3 | (1) | (2) |
Other income - net | 18 | 4 | 1 |
Income tax provision | |||
Income tax indemnification expense income tax provision | 4 | ||
Financing costs-net: | |||
Interest expense, net of amounts capitalized | 79 | 73 | 69 |
Interest income | (11) | (10) | (14) |
Foreign currency transaction losses | 5 | 3 | 6 |
Financing Costs, Net | 73 | 66 | 61 |
Interest capitalized | $ 4 | $ 4 | $ 2 |
Supplementary Information - C64
Supplementary Information - Consolidated Statements of Cash Flow (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Supplementary Cash Flow Information | |||
Share-based compensation expense | $ 26 | $ 28 | $ 21 |
Other | 13 | 16 | 18 |
Total other non-cash charges to net income | 39 | 44 | 39 |
Interest paid | 77 | 59 | 52 |
Income taxes paid | $ 289 | $ 254 | $ 158 |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 12, 2014 | |
Preferred stock: | ||||
Preferred stock, authorized shares | 25,000,000 | 25,000,000 | ||
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 | ||
Preferred Stock, Shares Issued | 0 | 0 | ||
Preferred stock, outstanding shares | 0 | 0 | ||
Treasury stock: | ||||
Purchase/acquisition of treasury stock | (1,000,000) | 0 | ||
Cost to repurchase common shares | $ 123 | |||
Payment made for repurchase of shares | $ 123 | $ 8 | $ 41 | |
Stock Repurchase 2014 Program | ||||
Treasury stock: | ||||
Shares authorized to be repurchased | 5,000,000 | |||
Stock Repurchase 2013 Program | ||||
Treasury stock: | ||||
Shares authorized to be repurchased | 4,000,000 |
Equity (Details)66
Equity (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Increase (decrease) in common stock, number of shares | |||
Balance at the beginning of the period | 77,810,875 | ||
Purchase/acquisition of treasury stock | (1,000,000) | 0 | |
Balance at the end of the period | 77,810,875 | 77,810,875 | |
Share-based compensation expense | |||
Pre-tax compensation expense | $ 26 | $ 28 | $ 21 |
Income tax benefit | (8) | (11) | (8) |
Total share-based compensation expense, net of income taxes | $ 18 | $ 17 | $ 13 |
Stock Incentive Plan | |||
Shares Authorized Under Stock Incentive Plan | 8,000,000 | ||
Shares available for future grants under Stock Incentive Plan | 3,700,000 | ||
Common Stock Issued | |||
Increase (decrease) in common stock, number of shares | |||
Balance at the beginning of the period | 77,811,000 | 77,811,000 | 77,811,000 |
Balance at the end of the period | 77,811,000 | 77,811,000 | 77,811,000 |
Treasury Stock | |||
Increase (decrease) in common stock, number of shares | |||
Balance at the beginning of the period | 5,397,000 | 6,195,000 | 6,489,000 |
Issuance of restricted stock units as compensation | (103,000) | (94,000) | (102,000) |
Performance shares and other share-based awards | (75,000) | (70,000) | (75,000) |
Stock options exercised | (443,000) | (636,000) | (556,000) |
Purchase/acquisition of treasury stock | 1,039,000 | 2,000 | 439,000 |
Balance at the end of the period | 5,815,000 | 5,397,000 | 6,195,000 |
Common Stock Shares Outstanding | |||
Increase (decrease) in common stock, number of shares | |||
Balance at the beginning of the period | 72,414,000 | 71,616,000 | 71,322,000 |
Issuance of restricted stock units as compensation | 103,000 | 94,000 | 102,000 |
Performance shares and other share-based awards | 75,000 | 70,000 | 75,000 |
Stock options exercised | 443,000 | 636,000 | 556,000 |
Purchase/acquisition of treasury stock | (1,039,000) | (2,000) | (439,000) |
Balance at the end of the period | 71,996,000 | 72,414,000 | 71,616,000 |
Employee Stock Option | |||
Increase (decrease) in common stock, number of shares | |||
Stock options exercised | 443,000 | ||
Share-based compensation expense | |||
Pre-tax compensation expense | $ 7 | $ 9 | $ 7 |
Income tax benefit | (2) | (3) | (3) |
Total share-based compensation expense, net of income taxes | 5 | 6 | 4 |
Restricted Stock Units (RSUs) | |||
Share-based compensation expense | |||
Pre-tax compensation expense | 13 | 12 | 9 |
Income tax benefit | (4) | (5) | (3) |
Total share-based compensation expense, net of income taxes | 9 | 7 | 6 |
Performance shares and other share-based awards | |||
Share-based compensation expense | |||
Pre-tax compensation expense | 6 | 7 | 5 |
Income tax benefit | (2) | (3) | (2) |
Total share-based compensation expense, net of income taxes | $ 4 | $ 4 | $ 3 |
Equity (Details)67
Equity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Assumptions used to measure the fair value of awards | |||
Expected life | 5 years 6 months | 5 years 6 months | 5 years 6 months |
Risk-free interest rate (as a percent) | 1.90% | 1.40% | 1.40% |
Expected volatility (as a percent) | 22.50% | 23.40% | 25.20% |
Expected dividend yield (as a percent) | 1.70% | 1.80% | 2.00% |
Adjustments for new accounting pronouncements | |||
Provision for income taxes | $ (237) | $ (246) | $ (187) |
Employee Stock Option | |||
Stock Options | |||
Term of options | 10 years | ||
Required service period | 1 year | ||
Period of vesting | 3 years | ||
Non-qualified options, granted | 278 | 329 | |
Stock option activity | |||
Outstanding at the beginning of the period (in shares) | 2,281 | ||
Granted (in shares) | 278 | 329 | |
Exercised (in shares) | (443) | ||
Cancelled (in shares) | (21) | ||
Outstanding at the end of the period (in shares) | 2,095 | 2,281 | |
Exercisable at the end of the period (in shares) | 1,527 | ||
Share options, weighted average exercise price per share | |||
Outstanding at the beginning of the period (in dollars per share) | $ 61.39 | ||
Granted (in dollars per share) | 117.65 | ||
Exercised (in dollars per share) | 46.16 | ||
Cancelled (in dollars per share) | 87.50 | ||
Outstanding at the end of the period (in dollars per share) | 71.81 | $ 61.39 | |
Exercisable at the end of the period (in dollars per share) | $ 59.14 | ||
Additional information pertaining to stock options | |||
Options outstanding average remaining contractual life | 5 years 10 months 13 days | 5 years 11 months 5 days | |
Stock options exercisable average remaining contractual life | 5 years 2 months 27 days | ||
Options outstanding aggregate intrinsic value | $ 142 | $ 145 | |
Stock options exercisable aggregate intrinsic value | 123 | ||
Cash received from exercise of stock options | 20 | $ 29 | $ 21 |
Unrecognized compensation cost | $ 3 | ||
Weighted-average period for amortization of unrecognized compensation cost | 1 year 6 months | ||
Weighted average grant date fair value of stock options granted (per share) | $ 23.90 | $ 18.73 | $ 16.04 |
Total intrinsic value of stock options exercised | $ 35 | $ 46 | $ 27 |
Equity (Details)68
Equity (Details) $ / shares in Units, shares in Thousands | 1 Months Ended | 12 Months Ended | ||
Feb. 28, 2017shares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | |
Other disclosures | ||||
Total share-based compensation expense included in net income | $ 26,000,000 | $ 28,000,000 | $ 21,000,000 | |
Long Term Incentive Plan | Director | ||||
Other disclosures | ||||
Amount of Directors' retainer paid in stock | $ 110,000 | |||
Percentage of additional Directors' retainer paid in stock | 50 | |||
Restricted Stock Units (RSUs) | ||||
Stock Options | ||||
Vesting terms | 3 years | |||
Restricted stock unit activity | ||||
Non-vested at the beginning of the period (in shares) | shares | 429 | |||
Granted (in shares) | shares | 125 | |||
Vested (in shares) | shares | (148) | |||
Cancelled (in shares) | shares | (19) | |||
Non-vested at the end of the period (in shares) | shares | 387 | 429 | ||
Weighted-average fair value per share | ||||
Non-vested at the beginning of the period (in dollars per share) | $ / shares | $ 81.04 | |||
Granted (in dollars per share) | $ / shares | 119.54 | |||
Vested (in dollars per share) | $ / shares | 65.03 | |||
Cancelled (in dollars per share) | $ / shares | 95.17 | |||
Non-vested at the end of the period (in dollars per share) | $ / shares | $ 100.13 | $ 81.04 | ||
Fair value of awards vested during the year | $ 18,000,000 | $ 15,000,000 | 13,000,000 | |
Unrecognized compensation cost | $ 13,000,000 | |||
Weighted-average period for amortization of unrecognized compensation cost | 1 year 8 months 12 days | |||
Other disclosures | ||||
Service period over which compensation expense would be amortized | 1 year | |||
Compensation cost related to unvested restricted share and restricted stock units and performance shares included in share-based payments subject to redemption on the Balance Sheet | $ 25,000,000 | 21,000,000 | ||
Total share-based compensation expense included in net income | $ 13,000,000 | 12,000,000 | 9,000,000 | |
Restricted Stock Units (RSUs) | Compensation Arrangement | Director | ||||
Other disclosures | ||||
Awards outstanding (in shares) | shares | 182 | |||
Carrying value of share units outstanding | $ 11,000,000 | |||
Total share-based compensation expense included in net income | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 | |
Performance Shares award | Long Term Incentive Plan | Senior Management | ||||
Stock Options | ||||
Vesting terms | 3 years | |||
Restricted stock unit activity | ||||
Granted (in shares) | shares | 38 | 44 | 47 | |
Vested (in shares) | shares | (115) | |||
Cancelled (in shares) | shares | (3) | |||
Weighted-average fair value per share | ||||
Granted (in dollars per share) | $ / shares | $ 114.08 | $ 131.34 | $ 77.54 | |
Unrecognized compensation cost | $ 3,000,000 | |||
Award payout achieved (as a percent) | 200 | |||
Remaining requisite service period (in years) | 1 year 8 months 12 days | |||
Other disclosures | ||||
Compensation cost related to unvested restricted share and restricted stock units and performance shares included in share-based payments subject to redemption on the Balance Sheet | $ 11,000,000 | $ 9,000,000 | ||
Performance shares calculation period (in years) | 3 years | |||
Performance Shares award | Long Term Incentive Plan | Senior Management | Minimum | ||||
Other disclosures | ||||
Performance shares available for vesting (as a percent) | 0.00% | |||
Performance Shares award | Long Term Incentive Plan | Senior Management | Maximum | ||||
Other disclosures | ||||
Performance shares available for vesting (as a percent) | 200.00% | |||
Performance Shares Award Granted in 2017 | Long Term Incentive Plan | Senior Management | ||||
Weighted-average fair value per share | ||||
Award payout achieved (as a percent) | 127 | |||
Performance Shares Award Granted in 2016 | Long Term Incentive Plan | Senior Management | ||||
Weighted-average fair value per share | ||||
Award payout achieved (as a percent) | 175 | |||
Performance Shares Award Granted in 2015 | Long Term Incentive Plan | Senior Management | ||||
Weighted-average fair value per share | ||||
Award payout achieved (as a percent) | 200 |
Equity (Details)69
Equity (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance at the beginning of the period | $ (1,071) | $ (1,102) | $ (782) |
Other comprehensive (loss) income before reclassification adjustments | 52 | (13) | (367) |
Amount reclassified from accumulated OCI | (4) | (50) | (47) |
Tax benefit (provision) | 2 | (6) | |
Net other comprehensive income (loss) | 58 | 31 | (320) |
Balance at end of the period | (1,013) | (1,071) | (1,102) |
Cumulative Translation Adjustment | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance at the beginning of the period | (1,008) | (1,025) | (701) |
Other comprehensive (loss) income before reclassification adjustments | 57 | 17 | (324) |
Net other comprehensive income (loss) | 57 | 17 | (324) |
Balance at end of the period | (951) | (1,008) | (1,025) |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance at the beginning of the period | (7) | (29) | (19) |
Other comprehensive (loss) income before reclassification adjustments | (16) | (17) | (61) |
Amount reclassified from accumulated OCI | (6) | (49) | (46) |
Tax benefit (provision) | 4 | (10) | 5 |
Net other comprehensive income (loss) | (6) | 22 | (10) |
Balance at end of the period | (13) | (7) | (29) |
Pension and Postretirement Adjustment | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance at the beginning of the period | (56) | (47) | (61) |
Other comprehensive (loss) income before reclassification adjustments | 8 | (14) | 18 |
Amount reclassified from accumulated OCI | 2 | (1) | (1) |
Tax benefit (provision) | (1) | 4 | (5) |
Net other comprehensive income (loss) | 5 | (9) | 14 |
Balance at end of the period | (51) | (56) | (47) |
Unrealized (Loss) Gain on Investment | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||
Balance at the beginning of the period | (1) | (1) | |
Other comprehensive (loss) income before reclassification adjustments | 3 | 1 | |
Tax benefit (provision) | (1) | ||
Net other comprehensive income (loss) | 2 | $ 1 | |
Balance at end of the period | $ 2 | $ (1) |
Equity (Details)70
Equity (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Cost of sales | $ 4,359 | $ 4,302 | $ 4,379 |
Financing costs, net | 73 | 66 | 61 |
Total before tax reclassifications | (4) | (50) | (47) |
Tax benefit | 1 | 16 | 14 |
Total after-tax reclassifications | (3) | (34) | (33) |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Total before tax reclassifications | (6) | (49) | (46) |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Reclassification out of Accumulated Other Comprehensive Income | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Gains (losses) related to pension and other postretirement obligations | 2 | (1) | (1) |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Reclassification out of Accumulated Other Comprehensive Income | Commodity Contracts | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Cost of sales | (5) | (45) | (43) |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Reclassification out of Accumulated Other Comprehensive Income | Foreign Currency Contracts | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Cost of sales | 1 | (2) | |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Reclassification out of Accumulated Other Comprehensive Income | Interest Rate Contract | |||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | |||
Financing costs, net | $ (2) | $ (2) | $ (3) |
Equity (Details)71
Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Basic EPS: | |||||||||||
Net Income Available to Ingredion - basic | $ 519 | $ 485 | $ 402 | ||||||||
Weighted average number of shares outstanding, basic | 72,000,000 | 72,300,000 | 71,600,000 | ||||||||
Basic earnings per common share of Ingredion (in dollars per share) | $ 1.37 | $ 2.31 | $ 1.81 | $ 1.72 | $ 1.29 | $ 1.98 | $ 1.62 | $ 1.81 | $ 7.21 | $ 6.70 | $ 5.62 |
Effect of Dilutive Securities: | |||||||||||
Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards | 1,500,000 | 1,800,000 | 1,400,000 | ||||||||
Diluted EPS: | |||||||||||
Net Income Available to Ingredion - diluted | $ 519 | $ 485 | $ 402 | ||||||||
Weighted Average Number of Shares Outstanding, Diluted, Total | 73,500,000 | 74,100,000 | 73,000,000 | ||||||||
Earnings Per Share, Diluted | $ 1.35 | $ 2.26 | $ 1.78 | $ 1.68 | $ 1.26 | $ 1.93 | $ 1.58 | $ 1.77 | $ 7.06 | $ 6.55 | $ 5.51 |
Antidilutive securities excluded in calculation of diluted EPS: | |||||||||||
Antidilutive securities excluded from computation of earnings per share amount | 300,000 | 0 | 300,000 |
Segment Information (Details)
Segment Information (Details) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2017USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Segment information | ||||||||||||
Number of reportable business segments | item | 4 | |||||||||||
Net sales | $ 1,437 | $ 1,485 | $ 1,457 | $ 1,453 | $ 1,399 | $ 1,489 | $ 1,455 | $ 1,360 | $ 5,832 | $ 5,704 | $ 5,621 | |
Subtotal | 884 | 830 | 705 | |||||||||
Restructuring charges | (10) | (5) | (5) | (11) | (2) | $ (2) | $ (10) | (38) | (19) | (28) | ||
Acquisition / integration costs | (1) | $ (1) | (1) | (1) | $ (1) | (4) | (3) | (10) | ||||
Charge for fair value markup of acquired inventory | $ (3) | $ (3) | (9) | (10) | ||||||||
Insurance settlement | 9 | |||||||||||
Litigation settlement | (7) | |||||||||||
Gain from sale of land | 10 | |||||||||||
Total operating income | 842 | 808 | 660 | |||||||||
Financing costs, net | 73 | 66 | 61 | |||||||||
Income before income taxes | 769 | 742 | 599 | |||||||||
Expense relating to tax indemnification agreement | 4 | |||||||||||
Income tax indemnification expense income tax provision | 4 | |||||||||||
Other restructuring charges including refinement of prior year restructuring activities | 2 | |||||||||||
Total Assets | 6,080 | 5,782 | 6,080 | 5,782 | ||||||||
Depreciation and amortization | 209 | 196 | 194 | |||||||||
Mechanical stores expense | 57 | 57 | 57 | |||||||||
Capital expenditures | 314 | 284 | 280 | |||||||||
Write-off of impaired goodwill | 0 | 0 | $ 0 | |||||||||
Long-lived assets | 2,360 | 2,237 | 2,360 | 2,237 | ||||||||
US | ||||||||||||
Segment information | ||||||||||||
Net sales | 2,191 | 2,117 | 1,983 | |||||||||
Long-lived assets | 977 | 955 | 977 | 955 | ||||||||
MEXICO | ||||||||||||
Segment information | ||||||||||||
Net sales | 952 | 955 | 945 | |||||||||
Long-lived assets | 306 | 303 | 306 | 303 | ||||||||
BRAZIL | ||||||||||||
Segment information | ||||||||||||
Net sales | 519 | 522 | 452 | |||||||||
Long-lived assets | 235 | 245 | 235 | 245 | ||||||||
CANADA | ||||||||||||
Segment information | ||||||||||||
Net sales | 385 | 375 | 417 | |||||||||
Long-lived assets | 179 | 147 | 179 | 147 | ||||||||
KOREA | ||||||||||||
Segment information | ||||||||||||
Net sales | 275 | 266 | 276 | |||||||||
Long-lived assets | 109 | 84 | 109 | 84 | ||||||||
THAILAND | ||||||||||||
Segment information | ||||||||||||
Long-lived assets | 137 | 119 | 137 | 119 | ||||||||
GERMANY | ||||||||||||
Segment information | ||||||||||||
Long-lived assets | 133 | 106 | 133 | 106 | ||||||||
Other Countries | ||||||||||||
Segment information | ||||||||||||
Net sales | 1,510 | 1,469 | 1,548 | |||||||||
Long-lived assets | 284 | 278 | 284 | 278 | ||||||||
Operating Segments | North America | ||||||||||||
Segment information | ||||||||||||
Net sales | 3,529 | 3,447 | 3,345 | |||||||||
Subtotal | 661 | 610 | 479 | |||||||||
Total Assets | 3,967 | 3,796 | 3,967 | 3,796 | ||||||||
Depreciation and amortization | 140 | 130 | 123 | |||||||||
Mechanical stores expense | 37 | 37 | 36 | |||||||||
Capital expenditures | 180 | 167 | 158 | |||||||||
Operating Segments | South America | ||||||||||||
Segment information | ||||||||||||
Net sales | 1,007 | 1,010 | 1,013 | |||||||||
Subtotal | 80 | 89 | 101 | |||||||||
Total Assets | 812 | 809 | 812 | 809 | ||||||||
Depreciation and amortization | 27 | 26 | 30 | |||||||||
Mechanical stores expense | 12 | 12 | 13 | |||||||||
Capital expenditures | 50 | 56 | 61 | |||||||||
Operating Segments | Asia Pacific | ||||||||||||
Segment information | ||||||||||||
Net sales | 740 | 709 | 733 | |||||||||
Subtotal | 112 | 111 | 107 | |||||||||
Total Assets | 774 | 697 | 774 | 697 | ||||||||
Depreciation and amortization | 25 | 23 | 23 | |||||||||
Mechanical stores expense | 5 | 5 | 5 | |||||||||
Capital expenditures | 51 | 41 | 36 | |||||||||
Operating Segments | EMEA | ||||||||||||
Segment information | ||||||||||||
Net sales | 556 | 538 | 530 | |||||||||
Subtotal | 113 | 106 | 93 | |||||||||
Total Assets | 527 | $ 480 | 527 | 480 | ||||||||
Depreciation and amortization | 17 | 17 | 18 | |||||||||
Mechanical stores expense | 3 | 3 | 3 | |||||||||
Capital expenditures | 33 | 20 | 25 | |||||||||
Corporate, Non -Segment | ||||||||||||
Segment information | ||||||||||||
Subtotal | (82) | (86) | (75) | |||||||||
Expense relating to tax indemnification agreement | 4 | |||||||||||
Income tax indemnification expense income tax provision | 4 | |||||||||||
Argentina employee-related severance | ||||||||||||
Segment information | ||||||||||||
Restructuring charges | (17) | |||||||||||
Stevia Leaf Extraction Process in Brazil | ||||||||||||
Segment information | ||||||||||||
Restructuring charges | $ (13) | (13) | ||||||||||
Finance transformation initiative in North America | ||||||||||||
Segment information | ||||||||||||
Restructuring charges | (6) | |||||||||||
Finance transformation initiative in North America | Employee Severance related costs | ||||||||||||
Segment information | ||||||||||||
Restructuring charges | $ (3) | |||||||||||
IT transformation | Employee Severance And Other Costs | ||||||||||||
Segment information | ||||||||||||
Restructuring charges | (11) | |||||||||||
Optimization Initiative Of North And South America | Employee Severance related costs | ||||||||||||
Segment information | ||||||||||||
Restructuring charges | (6) | |||||||||||
Port Colborne Ontario Canada Plant | Facility Closing | ||||||||||||
Segment information | ||||||||||||
Restructuring charges | $ (2) | |||||||||||
Port Colborne Ontario Canada Plant | Facility Closing | CANADA | ||||||||||||
Segment information | ||||||||||||
Restructuring charges | (4) | |||||||||||
Plant Closing In Trombudo Central And Conchal | Facility Closing | ||||||||||||
Segment information | ||||||||||||
Restructuring charges | (12) | |||||||||||
Penford | ||||||||||||
Segment information | ||||||||||||
Restructuring charges | $ (12) |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2017USD ($) | |
BRAZIL | |
Commitments and Contingencies | |
Reserve maintained for labor claims | $ 5 |
Quarterly Financial Data (Una74
Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Quarterly Financial Data (Unaudited) | |||||||||||
Net sales before shipping and handling costs | $ 1,527 | $ 1,574 | $ 1,542 | $ 1,537 | $ 1,484 | $ 1,569 | $ 1,533 | $ 1,434 | $ 6,180 | $ 6,022 | $ 5,958 |
Less: shipping and handling costs | 90 | 89 | 85 | 84 | 85 | 80 | 78 | 74 | 348 | 318 | 337 |
Net sales | 1,437 | 1,485 | 1,457 | 1,453 | 1,399 | 1,489 | 1,455 | 1,360 | 5,832 | 5,704 | 5,621 |
Gross profit | 360 | 388 | 373 | 352 | 339 | 369 | 355 | 339 | 1,473 | 1,402 | 1,242 |
Net income attributable to Ingredion | $ 99 | $ 166 | $ 130 | $ 124 | $ 94 | $ 143 | $ 117 | $ 130 | $ 519 | $ 485 | $ 402 |
Basic earnings per common share of Ingredion (in dollars per share) | $ 1.37 | $ 2.31 | $ 1.81 | $ 1.72 | $ 1.29 | $ 1.98 | $ 1.62 | $ 1.81 | $ 7.21 | $ 6.70 | $ 5.62 |
Diluted earnings per common share of Ingredion (in dollars per share) | 1.35 | 2.26 | 1.78 | 1.68 | 1.26 | 1.93 | 1.58 | 1.77 | $ 7.06 | $ 6.55 | $ 5.51 |
Per share dividends declared | $ 0.60 | $ 0.60 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.50 | $ 0.45 | $ 0.45 | |||
Restructuring charges | $ 10 | $ 5 | $ 5 | $ 11 | $ 2 | $ 2 | $ 10 | $ 38 | $ 19 | $ 28 | |
Charge for fair value markup of acquired inventory | $ 3 | 3 | 9 | 10 | |||||||
Pre-tax Acquisition and integration costs | 1 | 1 | $ 1 | 1 | $ 1 | 4 | $ 3 | $ 10 | |||
(Gain) loss on income tax settlement | $ (10) | $ 27 | |||||||||
TCJA provisional tax benefit | 23 | $ 23 | |||||||||
Gain on proceeds from insurance | $ 6 |