Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2018 | Feb. 14, 2019 | Jun. 30, 2018 | |
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, 2018 | ||
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 Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 7,812,000,000 | ||
Entity Common Stock, Shares Outstanding | 66,667,462 | ||
Document Fiscal Year Focus | 2,018 | ||
Document Fiscal Period Focus | FY |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements of Income | |||
Net sales before shipping and handling costs | $ 6,289 | $ 6,244 | $ 6,082 |
Less: Shipping and handling costs | 448 | 412 | 378 |
Net sales | 5,841 | 5,832 | 5,704 |
Cost of sales | 4,473 | 4,360 | 4,303 |
Gross profit | 1,368 | 1,472 | 1,401 |
Operating expenses | 611 | 616 | 580 |
Other income, net | (10) | (18) | (4) |
Restructuring/impairment charges | 64 | 38 | 19 |
Operating income | 703 | 836 | 806 |
Financing costs, net | 86 | 73 | 66 |
Other, non-operating income | (4) | (6) | (2) |
Income before income taxes | 621 | 769 | 742 |
Provision for income taxes | 167 | 237 | 246 |
Net income | 454 | 532 | 496 |
Less: Net income attributable to non-controlling interests | 11 | 13 | 11 |
Net income attributable to Ingredion | $ 443 | $ 519 | $ 485 |
Weighted average common shares outstanding: | |||
Basic (in shares) | 70.9 | 72 | 72.3 |
Diluted (in shares) | 71.8 | 73.5 | 74.1 |
Earnings per common share of Ingredion: | |||
Basic (in dollars per share) | $ 6.25 | $ 7.21 | $ 6.70 |
Diluted (in dollars per share) | $ 6.17 | $ 7.06 | $ 6.55 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements of Comprehensive Income (Loss) | |||
Net income | $ 454 | $ 532 | $ 496 |
Other comprehensive income: | |||
Gains (losses) on cash flow hedges, net of income tax effect of $2, $6, and $6, respectively | 6 | (10) | (11) |
Losses on cash flow hedges reclassified to earnings, net of income tax effect of $2, $2, and $16, respectively | 4 | 4 | 33 |
Actuarial (losses) gains on pension and other postretirement obligations, settlements and plan amendments, net of income tax effect of $5 , $2, and $4, respectively | (15) | 6 | (10) |
(Gains) losses related to pension and other postretirement obligations reclassified to earnings, net of income tax effect of $ — , $1, and $ — , respectively | (1) | 1 | |
Unrealized gains on investments, net of income tax effect of $ — , $1, and $ — , respectively | 2 | 1 | |
Currency translation adjustment | (129) | 57 | 7 |
Comprehensive income | 320 | 590 | 517 |
Less: Comprehensive income attributable to non-controlling interests | 3 | 13 | 12 |
Comprehensive income attributable to Ingredion | $ 317 | $ 577 | $ 505 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Consolidated Statements of Comprehensive Income (Loss) | |||
Gains (losses) on cash-flow hedges, income tax effect | $ (2) | $ 6 | $ 6 |
Losses on cash-flow hedges reclassified to earnings, income tax effect | (2) | (2) | (16) |
Actuarial (losses) gains on pension and other postretirement obligations, settlements and plan amendments, income tax effect | $ 5 | (2) | $ 4 |
(Gains) losses related to pension and other postretirement obligations reclassified to earnings, income tax effectv | 1 | ||
Unrealized (losses) gains on investments, income tax effect | $ (1) |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||||
Cash and cash equivalents | $ 327 | $ 595 | $ 512 | $ 434 |
Short-term investments | 7 | 9 | ||
Accounts receivable, net | 951 | 961 | ||
Inventories | 824 | 823 | ||
Prepaid expenses | 29 | 27 | ||
Total current assets | 2,138 | 2,415 | ||
Land | 199 | 225 | ||
Buildings | 715 | 731 | ||
Machinery and equipment | 4,199 | 4,252 | ||
Property, plant and equipment, at cost | 5,113 | 5,208 | ||
Accumulated depreciation | (2,915) | (2,991) | ||
Property, plant and equipment - net | 2,198 | 2,217 | ||
Goodwill | 791 | 803 | 784 | |
Other intangible assets, net of accumulated amortization of $167 and $139, respectively | 460 | 493 | ||
Deferred income tax assets | 10 | 9 | ||
Other assets | 131 | 143 | ||
Total assets | 5,728 | 6,080 | ||
Current liabilities: | ||||
Short-term borrowings | 169 | 120 | ||
Accounts payable | 452 | 493 | ||
Accrued liabilities | 325 | 344 | ||
Total current liabilities | 946 | 957 | ||
Non-current liabilities | 217 | 227 | ||
Long-term debt | 1,931 | 1,744 | ||
Deferred income tax liabilities | 189 | 199 | ||
Share-based payments subject to redemption | 37 | 36 | $ 30 | $ 24 |
Ingredion stockholders’ equity: | ||||
Preferred stock — authorized 25,000,000 shares — $0.01 par value, none issued | ||||
Common stock — authorized 200,000,000 shares — $0.01 par value, 77,810,875 issued at December 31, 2018 and December 31, 2017, respectively | 1 | 1 | ||
Additional paid-in capital | 1,096 | 1,138 | ||
Less: Treasury stock (common stock: 11,284,681 and 5,815,904 shares at December 31, 2018 and December 31, 2017, respectively) at cost | (1,091) | (494) | ||
Accumulated other comprehensive loss | (1,154) | (1,013) | ||
Retained earnings | 3,536 | 3,259 | ||
Total Ingredion stockholders’ equity | 2,388 | 2,891 | ||
Non-controlling interests | 20 | 26 | ||
Total equity | 2,408 | 2,917 | ||
Total liabilities and equity | $ 5,728 | $ 6,080 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Consolidated Balance Sheets | ||
Other intangible assets - accumulated amortization (in dollars) | $ 167 | $ 139 |
Preferred stock, authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, issued (in shares) | 0 | 0 |
Common stock, authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, issued (in shares) | 77,810,875 | 77,810,875 |
Treasury stock (in shares) | 11,284,681 | 5,815,904 |
Consolidated Statements of Equi
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, 2015 | $ 1 | $ 1,160 | $ (467) | $ (1,102) | $ 2,552 | $ 36 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 485 | 11 | $ 496 | ||||
Dividends declared | (138) | (7) | |||||
Share-based compensation, net of issuance | (11) | 54 | 6 | ||||
Other comprehensive income (loss) | 31 | (10) | |||||
Balance at Dec. 31, 2016 | 1 | 1,149 | (413) | (1,071) | 2,899 | 30 | |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 519 | 13 | 532 | ||||
Dividends declared | (159) | (15) | |||||
Repurchases of common stock | (123) | (123) | |||||
Share-based compensation, net of issuance | (11) | 42 | 6 | ||||
Other comprehensive income (loss) | 58 | (2) | |||||
Balance at Dec. 31, 2017 | 1 | 1,138 | (494) | (1,013) | 3,259 | 26 | 2,917 |
Increase (Decrease) in Stockholders' Equity | |||||||
Net income | 443 | 11 | 454 | ||||
Dividends declared | (173) | (9) | |||||
Repurchases of common stock | (33) | (624) | (657) | ||||
Share-based compensation, net of issuance | (5) | 27 | 1 | ||||
Other comprehensive income (loss) | (134) | (7) | |||||
Other | (4) | (7) | 7 | (1) | |||
Balance at Dec. 31, 2018 | $ 1 | $ 1,096 | $ (1,091) | $ (1,154) | $ 3,536 | $ 20 | $ 2,408 |
Consolidated Statement of Redee
Consolidated Statement of Redeemable Equity $ in Millions | USD ($) |
Beginning Balance at Dec. 31, 2015 | $ 24 |
Consolidated Statements of Equity and Redeemable Equity | |
Share-based compensation, net of issuance | 6 |
Ending Balance at Dec. 31, 2016 | 30 |
Consolidated Statements of Equity and Redeemable Equity | |
Share-based compensation, net of issuance | 6 |
Ending Balance at Dec. 31, 2017 | 36 |
Consolidated Statements of Equity and Redeemable Equity | |
Share-based compensation, net of issuance | 1 |
Ending Balance at Dec. 31, 2018 | $ 37 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Cash provided by operating activities | |||
Net income | $ 454 | $ 532 | $ 496 |
Non-cash charges to net income: | |||
Depreciation and amortization | 247 | 209 | 196 |
Mechanical stores expense | 57 | 57 | 57 |
Deferred income taxes | (23) | 67 | (5) |
Charge for fair value markup of acquired inventory | 9 | ||
Other | 39 | 39 | 44 |
Changes in working capital: | |||
Accounts receivable and prepaid expenses | (70) | (44) | (131) |
Inventories | (50) | (34) | (19) |
Accounts payable and accrued liabilities | (3) | (49) | 127 |
Margin accounts | 5 | 6 | 15 |
Other | 47 | (23) | (9) |
Cash provided by operating activities | 703 | 769 | 771 |
Cash used for investing activities | |||
Capital expenditures and mechanical stores purchases | (350) | (314) | (284) |
Payments for acquisitions, net of cash acquired of $ — , $ — , and $4, respectively | (17) | (407) | |
Investment in a non-consolidated affiliate | (15) | (2) | |
Short-term investments | 1 | (3) | 1 |
Proceeds from disposal of plants and properties | 1 | 8 | 3 |
Other | 2 | ||
Cash used for investing activities | (361) | (326) | (689) |
Cash used for financing activities | |||
Proceeds from borrowings | 987 | 1,144 | 1,000 |
Payments on debt | (738) | (1,240) | (874) |
Debt issuance costs | (6) | ||
Repurchases of common stock | (657) | (123) | (8) |
Issuances of common stock for share-based compensation, net of settlements | 1 | 9 | 29 |
Dividends paid, including to non-controlling interests | (182) | (165) | (141) |
Cash used for financing activities | (589) | (375) | |
Effects of foreign exchange rate changes on cash | (21) | 15 | (4) |
(Decrease) increase in cash and cash equivalents | (268) | 83 | 78 |
Cash and cash equivalents, beginning of period | 595 | 512 | |
Cash and cash equivalents, end of period | $ 327 | $ 595 | $ 512 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Consolidated Statements of Cash Flows | |
Cash acquired from acquisition | $ 4 |
Description of the Business
Description of the Business | 12 Months Ended |
Dec. 31, 2018 | |
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 sweeteners, 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, 2018 | |
Summary of Significant Accounting Standards and 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). 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. The U.S. dollar is the functional currency for the Company’s subsidiaries in Mexico and as of July 1, 2018, in Argentina. In the second quarter of 2018, the Argentine peso rapidly devalued relative to the U.S. dollar, which along with increased inflation, resulted in a three-year cumulative inflation in that country exceeded 100 percent as of June 30, 2018. As a result, the Company elected to adopt highly inflationary accounting as of July 1, 2018 for its Argentina affiliate in accordance with GAAP. Under highly inflationary accounting, Argentina’s functional currency becomes the U.S. dollar. 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 2018, 2017 and 2016, the Company incurred foreign currency transaction net losses of $14 million, $5 million, and $3 million, respectively. The Company’s accumulated other comprehensive loss included in equity on the Consolidated Balance Sheets includes cumulative translation losses of $1.1 billion and $1 billion at December 31, 2018 and 2017, respectively. 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 are included in other assets in the Consolidated Balance Sheets. The Company holds equity and cost method investments, and equity securities as of December 31, 2018. 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. In December 2018, the Company entered into a $15 million equity method investment with Verdient Foods, Inc., a Canadian company based in Vanscoy, Saskatchewan. Investments are being made within the existing facility to make pulse-based protein concentrates and flours from peas, lentils and fava beans for human food applications . The Company did not have any investments accounted for under the equity method at December 31, 2017. 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 income, net in accordance with ASC 825 . 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, 2018 and 2017. 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 $217 million, $179 million, and $171 million for the years ended December 31, 2018, 2017, and 2016, 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: ASC Topic 350 requires that an entity test its goodwill balance for impairment at the reporting unit level at least annually. Historically, the Company has performed this test on October 1, the first day of its fourth quarter. During the first half of 2018, the Company elected to change the timing of its annual goodwill impairment test and annual indefinite-lived intangibles impairment test from the first day of the fourth quarter to the first day of the third quarter. Management believes this voluntary change is preferable as the timing of its annual impairment testing will better align with its annual strategic planning process. This impairment test date change was applied prospectively beginning on July 1, 2018 and had no effect on the Company’s consolidated financial statements. Goodwill ($791 million and $803 million at December 31, 2018 and 2017, 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 $460 million and $493 million at December 31, 2018 and 2017, respectively. The carrying value of goodwill by reportable business segment at December 31, 2018 and 2017 was as follows: North South Asia (in millions) America America Pacific EMEA Total 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 Acquisitions — — — — — Currency translation — (4) (3) (5) (12) Balance at December 31, 2018 $ 600 $ 22 $ 104 $ 65 $ 791 (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, 2018 and 2017 were as follows: North South Asia ( in millions) America America Pacific EMEA Total Goodwill before impairment charges $ 601 $ 59 $ 228 $ 70 $ 958 Accumulated impairment charges (1) (33) (121) — (155) Balance at December 31, 2017 600 26 107 70 803 Goodwill before impairment charges 601 55 225 65 946 Accumulated impairment charges (1) (121) — (155) Balance at December 31, 2018 $ 600 $ 22 $ 104 $ 65 $ 791 The following table summarizes the Company’s other intangible assets for the periods presented: As of December 31, 2018 (in millions) Gross Accumulated Amortization Net Weighted Average Useful Life (years) Trademarks/tradenames (indefinite-lived) $ 178 $ — $ 178 — Customer relationships 325 (77) 248 20 Technology 103 (80) 23 9 Other 21 (10) 11 16 Total other intangible assets $ 627 $ (167) $ 460 18 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 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 2018, $30 million in 2017, and $25 million in 2016. Based on acquisitions completed through December 31, 2018, intangible asset amortization expense for the next five years is shown below. (in millions) Year Amortization Expense 2019 $ 29 2020 27 2021 19 2022 18 2023 18 Balance thereafter 171 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 July 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 July 1, 2018, it was more likely than not that the fair value of its reporting units was greater than their carrying value. The Company continues to monitor its 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. 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 its qualitative assessment, the Company concluded that as of July 1, 2018, 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 accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which was adopted on January 1, 2018, using the full retrospective method. The recently adopted accounting standard is more fully described in the Company's Recently Adopted Accounting Standards and Note 4 of the Notes to the Consolidated Financial Statements. 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 70.9 million for 2018, 72.0 million for 2017 and 72.3 million for 2016. 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 71.8 million, 73.5 million and 74.1 million for 2018, 2017 and 2016, respectively. Approximately 0.5 million, 0.3 million, and 0.0 share-based awards of common stock were excluded in 2018, 2017, and 2016, 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. Recently Adopted Accounting Standards ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606): In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) that introduced a 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. The ASU 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 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. As of January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers , and all the related amendments (“new revenue standard”). The Company performed detailed procedures to review its revenue contracts held with its customers and did not identify any changes to the nature, amount, timing or uncertainty of revenue and cash flows arising from the contracts with customers as a result of the new revenue standard. The new revenue standard requires the Company to recognize revenue under the core principle to depict the transfer of products to customers in an amount reflecting the consideration the Company expects to receive. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. The Company identified customer purchase orders, which in some cases are governed by a master sales agreement, as the contracts with its customers. For each contract, the Company considers the transfer of products, each of which is distinct, to be the identified performance obligation. In determining the transaction price for the performance obligation, the Company evaluates whether the price is subject to adjustment to determine the consideration to which the Company expects to be entitled. The pricing model can be fixed or variable within the contract. The variable pricing model is based on historical commodity pricing and is determinable prior to completion of the performance obligation. Additionally, the Company has certain sales adjustments for volume incentive discounts and other discount arrangements that reduce the transaction price. The reduction of transaction price is estimated using the expected value method based on an analysis of historical volume incentives or discounts, over a period of time considered adequate to account for current pricing and business trends. Historically, actual volume incentives and discounts relative to those estimated and included when determining the transaction price have not materially differed. The product price as specified in the contract, net of any discounts, is considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar circumstances. Payment is received shortly after the performance obligation is satisfied, therefore, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. Revenue is recognized when the Company’s performance obligation is satisfied and control is transferred to the customer, which occurs at a point in time, either upon delivery to an agreed upon location or to the customer. Further, in determining whether control has transferred, the Company considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer. Historically, the Company included warehousing costs as a reduction of net sales before shipping and handling costs. In connection with the adoption of the new revenue standard, the Company determined these warehousing costs which were previously included as a reduction in net sales before shipping and handling costs are more appropriately classified as fulfillment activities based on the guidance of ASC 606. Therefore, upon adoption of the new revenue standard, the Company elected to include these costs within shipping and handling costs. The Company has elected to continue to classify shipping and handling costs as a reduction of net sales after implementing the new revenue standard consistent with its historical presentation. The Company has elected to make this adjustment on a retrospective basis, resulting in the change to the Consolidated Statements of Income shown below. The Company notes that the reclassification does not change reported net sales. 2017 2016 (in millions) As Reported As Adjusted As Reported As Adjusted Consolidated Statements of Income: Net sales before shipping and handling costs $ 6,180 $ 6,244 $ 6,022 $ 6,082 Less: shipping and handling costs 348 412 318 378 Net sales $ 5,832 $ 5,832 $ 5,704 $ 5,704 The Company used the full retrospective method, which requires the restatement of all previously presented financial results. The adoption of the new standard did not result in any retrospective changes to the Company’s Consolidated Statements of Comprehensive Income, Consolidated Balance Sheets, Consolidated Statements of Equity and Redeemable Equity, or the Consolidated Statements of Cash Flows. For detailed information about the Company’s revenue recognition refer to Note 4 of the Notes to the Consolidated Financial Statements. ASU No. 2017-07, Compensation-Retirement Benefits (Topic 715): 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 requires 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 was effective for annual periods beginning after December 15, 2017. As of January 1, 2018, the Company adopted the amendments to ASC 715. The Company retrospectively adopted the presentation of service cost separate from the other components of net periodic costs for all periods presented. The interest cost, expected return on assets, amortization of prior service costs, net remeasurement, and other costs have been reclassified from cost of sales and operating expenses to other, non-operating income . The Company elected to apply the practical expedient which allows it to reclassify amounts disclosed previously in the retirement benefits note as the basis for applying retrospective presentation for comparative periods as it is impracticable to determine the disaggregation of the cost components for amounts capitalized and amortized in those periods. On a prospective basis, the other components of net periodic benefit costs will not be included in amounts capitalized in inventory. The adoption of the new standard did not result in any retrospective changes to the Company’s Consolidated Statements of Comprehensive Income, Consolidated Balance Sheets, Consolidated Statements of Equity and Redeemable Equity, or the Consolidated Statements of Cash Flows. The adoption of the new standard impacted the presentation of the Company’s previously reported results in the Consolidated Statements of Income and Note 13 of the Consolidated Financial Statements as follows: 2017 2016 (in millions) As Reported As Adjusted As Reported As Adjusted Consolidated Statements of Income: Cost of sales $ 4,359 $ 4,360 $ 4,302 $ 4,303 Gross profit 1,473 1,472 1,402 1,401 Operating expenses 611 616 579 580 Operating income 842 836 808 806 Other, non-operating income - (6) - (2) 2017 2016 (in millions) As Reported As Adjusted As Reported As Adjusted Operating income: North America $ 661 $ 654 $ 610 $ 606 South America 80 81 89 90 Asia Pacific 112 115 111 113 EMEA 113 114 106 107 Corporate (82) (86) (86) (88) Subtotal 884 878 830 828 Total operating income $ 842 $ 836 $ 808 $ 806 Adoption of Highly Inflationary Accounting in Argentina ASC 830, Foreign Currency Matters requires the use of highly inflationary accounting for countries whose cumulative three-year inflation exceeds 100 percent. The Company has been closely monitoring the inflation data and currency volatility in Argentina, where there are multiple data sources for measuring and reporting inflation. In the second quarter of 2018, the Argentine peso rapidly devalued relative to the U.S. dollar, which along with increased inflation, triggered that the three-year cumulative inflation in that country exceeded 10 |
Acquisitions
Acquisitions | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018, the Company has 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 the Company’s 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. The Company finalized the purchase price allocation for all areas for the Sun Flour acquisition during the first quarter of 2018. The finalization of goodwill and intangible assets did not have a significant impact on previously estimated amounts. The acquisition of Sun Flour added $15 million to goodwill and identifiable intangible assets and $3 million to net tangible assets as of the acquisition date. Goodwill represents the amount by which the purchase price exceeds the estimated fair value of the net assets acquired. The goodwill related to Sun Flour is not tax deductible. The fair value adjustments for the year ended December 31, 2018 were not material. Included in the results of the acquired business for the year ended December 31, 2017 was an increase in pre-tax cost of sales of $9 million relating to the sale of inventory that was adjusted to fair value at the acquisition date for the acquired business in accordance with business combination accounting rules. Pro-forma results of operations for the acquisitions made in 2017 and 2016 have not been presented as the effect of each acquisition individually and in aggregate would not be material to the Company’s results of operations for any periods presented. The Company incurred immaterial pre-tax acquisition and integration costs in 2018. The Company incurred $4 million and $3 million of pre-tax acquisition and integration costs in 2017 and 2016, respectively, associated with its acquisitions. |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2018 | |
Revenue Recognition | |
Revenue Recognition | NOTE 4 – Revenue Recognition The Company applies the provisions of ASC 606-10, Revenue from Contracts with Customers . The Company recognizes revenue under the core principle to depict the transfer of products to customers in an amount reflecting the consideration the Company expects to receive. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. The Company identified customer purchase orders, which in some cases are governed by a master sales agreement, as the contracts with its customers. For each contract, the Company considers the transfer of products, each of which is distinct, to be the identified performance obligation. In determining the transaction price for the performance obligation, the Company evaluates whether the price is subject to adjustment to determine the consideration to which the Company expects to be entitled. The pricing model can be fixed or variable within the contract. The variable pricing model is based on historical commodity pricing and is determinable prior to completion of the performance obligation. Additionally, the Company has certain sales adjustments for volume incentive discounts and other discount arrangements that reduce the transaction price. The reduction of transaction price is estimated using the expected value method based on an analysis of historical volume incentives or discounts, over a period of time considered adequate to account for current pricing and business trends. Historically, actual volume incentives and discounts relative to those estimated and included when determining the transaction price have not materially differed. Volume incentives and discounts are accrued at the satisfaction of the performance obligation and accounted for in accounts payable and accrued expenses in the Consolidated Balance Sheets. These amounts are not significant as of December 31, 2018 and 2017. The product price as specified in the contract, net of any discounts, is considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar circumstances. Payment is received shortly after the performance obligation is satisfied, therefore, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. Revenue is recognized when the Company’s performance obligation is satisfied and control is transferred to the customer, which occurs at a point in time, either upon delivery to an agreed upon location or to the customer. Further, in determining whether control has transferred, the Company considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer. Shipping and handling activities related to contracts with customers represent fulfillment costs and are presented as a reduction of net sales before shipping and handling costs. Taxes assessed by governmental authorities and collected from customers are accounted for on a net basis and excluded from revenues. The Company applies a practical expedient to expense costs to obtain a contract as incurred as most contracts are one year or less. These costs are comprised primarily from the Company’s internal sales force compensation program. Under the terms of these programs these are generally earned and the costs are recognized at the time the revenue is recognized. From time to time the Company may enter into long term contracts with its customers. Historically, the contracts entered into by the Company do not result in significant contract assets or liabilities. Any such arrangements are accounted for in other assets or accounts payable and accrued liabilities in the Consolidated Balance Sheets. There were not significant contract assets or liabilities as of December 31, 2018 and 2017. The Company is principally engaged in the production and sale of starches and sweeteners for a wide range of industries, and is managed geographically on a regional basis. The Company’s operations are classified into four reportable business segments: North America, South America, Asia Pacific and Europe, Middle East and Africa (“EMEA”). The nature, amount, timing and uncertainty of the Company’s net sales are managed by the Company primarily based on its geographic segments. Each region’s product sales are unique to each region and have unique risks. (in millions) 2018 2017 2016 Net sales to unaffiliated customers: North America: Net sales before shipping and handling costs $ 3,857 $ 3,843 $ 3,734 Less: shipping and handling costs 346 314 287 Net sales $ 3,511 $ 3,529 $ 3,447 South America: Net sales before shipping and handling costs $ 988 $ 1,052 $ 1,054 Less: shipping and handling costs 45 45 44 Net sales $ 943 $ 1,007 $ 1,010 Asia Pacific: Net sales before shipping and handling costs $ 837 $ 772 $ 738 Less: shipping and handling costs 34 32 29 Net sales $ 803 $ 740 $ 709 EMEA: Net sales before shipping and handling costs $ 607 $ 577 $ 556 Less: shipping and handling costs 23 21 18 Net sales $ 584 $ 556 $ 538 |
Restructuring and Impairment Ch
Restructuring and Impairment Charges | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring and Impairment Charges | |
Impairment and Restructuring Charges | NOTE 5 – Restructuring and Impairment Charges In 2018, the Company recorded $64 million of pre-tax restructuring charges. During the second quarter of 2018, the Company introduced its Cost Smart program, designed to improve profitability, further streamline its global business and deliver increased value to shareholders through anticipated savings in cost of sales, including freight, and SG&A. For the year ended December 31, 2018, the Company recorded $49 million of restructuring expenses as part of the Cost Smart cost of sales program in relation to the cessation of wet-milling at the Stockton, California plant, As part of its Cost Smart SG&A program, during the third quarter of 2018, the Company announced a Finance Transformation initiative in Latin America to strengthen organizational capabilities and drive efficiencies to support the growth strategy of the Company. The Company recorded $4 million of employee-related severance and other costs for the year ended December 31, 2018, in relation to this initiative. The Company expects to incur between $1 million and $2 million in 2019 related to this initiative. In addition, restructuring expenses of $7 million ($6 million employee-related severance and $1 million of consulting costs) were recorded as part of the Cost Smart SG&A program for the year ended December 31, 2018 in the South America, APAC and North America segments. Additionally, for the year ended December 31, 2018, the Company recorded $3 million of other restructuring costs associated with the North America Finance Transformation initiative as well as $1 million of other restructuring costs related to the leaf extraction process in Brazil. The Company does not expect to incur any additional costs related to the North America Finance Transformation or the leaf extraction process in Brazil. In 2017, the Company recorded $38 million of pre-tax restructuring charges. The charges consist of $17 million of employee-related severance and other costs in connection to an organizational restructuring effort in Argentina, $13 million of pre-tax restructuring charges in relation to its leaf extraction process in Brazil, $6 million of employee-related severance and other costs associated with the Company’s optimization initiative in North America and $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. A summary of the Company’s severance accrual at December 31, 2018, is as follows (in millions): Balance in severance accrual as of December 31, 2017 $ 11 Cost Smart cost of sales and SG&A 8 Foreign exchange translation (3) Latin American Finance Transformation 2 Other 1 Payments made to terminated employees (9) Balance in severance accrual as of December 31, 2018 $ 10 Of the $10 million severance accrual at December 31, 2018, $9 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. No goodwill or indefinite-lived intangible asset impairment was recognized in 2018, 2017 or 2016 related to the Company’s annual impairment testing. |
Financial Instruments, Derivati
Financial Instruments, Derivatives and Hedging Activities | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018, AOCI included $2 million of losses (net of tax of $2 million) pertaining to commodities-related derivative instruments designated as cash flow hedges. 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. 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 an interest rate swap agreement that effectively converts the interest rates on $200 million of its $400 million of 4.625 percent senior notes, due November 1, 2020, to variable rates. This swap agreement calls 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 this interest rate swap agreement as a hedge of the changes in fair value of the underlying debt obligations attributable to changes in interest rates and accounts for it 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 the interest rate swap agreement as of December 31, 2018 was a $1 million loss, and is reflected in the Consolidated Balance Sheets within non-current liabilities, with an offsetting amount recorded in long-term debt to adjust the carrying amount of the hedged debt obligations. As of December 31, 2017, the fair value of the interest rate swap agreement was a $1 million gain, 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, 2018, or 2017. As of December 31, 2018 and 2017, AOCI included $2 million of losses (net of income taxes of $1 million) and $2 million of losses (net of income taxes of $1 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, 2018, the Company had foreign currency forward sales contracts that are designated as fair value hedges with an aggregate notional amount of $621 million and foreign currency forward purchase contracts with an aggregate notional amount of $165 million that hedged transactional exposures. As of December 31, 2017, the Company had foreign currency forward sales contracts 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. The fair values of these derivative instruments were assets of $5 million and $11 million at December 31, 2018 and December 31, 2017, respectively. The Company also has foreign currency derivative instruments that hedge certain foreign currency transactional exposures and are designated as cash flow hedges. The amount included in AOCI related to these hedges at December 31, 2018 was not significant. As of December 31, 2017, AOCI included $1 million of gains (net of income taxes of $1 million) related to these hedges. 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, 2018 Derivatives Designated as Hedging Instruments (in millions): Balance Sheet Location Fair Value Balance Sheet Location Fair Value Commodity and foreign currency Accounts receivable, net $ 22 Accounts payable and accrued liabilities $ 18 Commodity, foreign currency and interest rate contracts Other assets 2 Non-current liabilities 8 $ 24 $ 26 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 $ 14 $ 31 As of December 31, 2018, the Company had outstanding futures and option contracts that hedged the forecasted purchase of approximately 85 million bushels of corn. 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. As of December 31, 2018, the Company had no outstanding futures or option contracts for soybean oil. The Company also had outstanding swap and option contracts that hedged the forecasted purchase of approximately 28 million mmbtu’s of natural gas at December 31, 2018. Additionally, as of December 31, 2018, the Company had no outstanding ethanol futures contracts. Additional information relating to the Company’s derivative instruments is presented below (in millions, pre-tax): Year Ended December 31, 2018 Derivatives in Cash Flow Hedging Relationships Amount of Gains Location of Gains (Losses) Reclassified from AOCI into Income Amount of Gains Commodity contracts $ 8 Cost of sales $ (6) Foreign currency contracts — Net sales/cost of sales 1 Interest rate contracts — Financing costs, net (1) Total $ 8 $ (6) 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 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 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) As of December 31, 2018, AOCI included approximately $1 million of losses (net of an insignificant amount of income taxes), 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, 2018, AOCI included $1 million of losses (net of an insignificant amount of income taxes) on settled T-Locks and an insignificant amount of gains related to foreign currency hedges which are expected to be reclassified into earnings during the next 12 months. Cash flow hedges discontinued during 2018 or 2017 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, 2018 As of December 31, 2017 (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 $ 11 $ 11 $ — $ — $ 10 $ 10 $ — $ — Derivative assets 24 4 20 — 14 3 11 — Derivative liabilities 26 6 20 — 31 11 20 — Long-term debt 1,954 — 1,954 — 1,845 — 1,845 — (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, 2018 and 2017. December 31, 2018 December 31, 2017 Carrying Fair Carrying Fair (in millions) Amount Value Amount Value 3.2% senior notes due October 1, 2026 $ 496 $ 462 $ 496 $ 492 4.625% senior notes due November 1, 2020 399 409 398 421 6.625% senior notes due April 15, 2037 254 295 254 325 5.62% senior notes due March 25, 2020 200 205 200 212 Term loan credit agreement due April 25, 2019 165 165 395 395 Revolving credit facility 418 418 — — Fair value adjustment related to hedged fixed rate debt instrument (1) — 1 — Total long-term debt $ 1,931 $ 1,954 $ 1,744 $ 1,845 |
Financing Arrangements
Financing Arrangements | 12 Months Ended |
Dec. 31, 2018 | |
Financing Arrangements | |
Financing Arrangements | NOTE 7 – Financing Arrangements The Company had total debt outstanding of $2.1 billion and $1.9 billion at December 31, 2018 and 2017, respectively. Short-term borrowings at December 31, 2018 and 2017 consist primarily of amounts outstanding under various unsecured local country operating lines of credit. 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. The Company paid $25 million towards the Term Loan in December 2017 and an additional $230 million towards the Term Loan for the year ended December 31, 2018. All payments were made with cash on-hand. The Company’s long-term debt as of December 31, 2018 includes the remaining Term Loan balance of $165 million that matures on April 25, 2019. This borrowing is included in long-term debt as the Company has the ability and intent to refinance it on a long-term basis prior to the maturity date. 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. 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 its previously existing $1 billion senior unsecured revolving credit facility. 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, 2018, there were $418 million in borrowings outstanding under the Revolving Credit Agreement. In addition to borrowing availability under its Revolving Credit Agreement, the Company has approximately $507 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: As of As of (in millions) December 31, 2018 December 31, 2017 3.2% senior notes due October 1, 2026 $ 496 $ 496 4.625% senior notes due November 1, 2020 399 398 6.625% senior notes due April 15, 2037 254 254 5.62% senior notes due March 25, 2020 200 200 Term loan credit agreement due April 25, 2019 165 395 Revolving credit facility 418 — Fair value adjustment related to hedged fixed rate debt instruments (1) 1 Long-term debt 1,744 Short-term borrowings 120 Total debt $ $ 1,864 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 $165 million matures in 2019. This borrowing is included in long-term debt as the Company has the ability and intent to refinance it on a long-term basis prior to the maturity date. The Company guarantees certain obligations of its consolidated subsidiaries. The amount of the obligations guaranteed aggregated $57 million and $56 million at December 31, 2018 and 2017, respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2018 | |
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 $60 million, $51 million and $53 million in 2018, 2017 and 2016, respectively. Minimum lease payments due on non-cancellable leases existing at December 31, 2018, are shown below: Year (in millions) Minimum Lease Payments 2019 $ 53 2020 44 2021 40 2022 27 2023 22 Balance thereafter 27 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2018 | |
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) 2018 2017 2016 Income before income taxes: U.S. $ 121 $ 226 $ 176 Foreign 500 543 566 Total income before income taxes 621 769 742 Provision for income taxes: Current tax (benefit) expense: U.S. federal 17 (13) 95 State and local 1 4 8 Foreign 172 179 148 Total current tax expense 190 170 251 Deferred tax expense (benefit): U.S. federal (14) 77 13 State and local (2) 4 1 Foreign (7) (14) (19) Total deferred tax expense (benefit) (23) 67 (5) Total provision for income taxes $ 167 $ 237 $ 246 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, 2018 and 2017 are summarized as follows: 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, 2018 and 2017 are summarized as follows: (in millions) 2018 2017 Deferred tax assets attributable to: Employee benefit accruals $ 20 $ 20 Pensions and postretirement plans 23 20 Derivative contracts 1 5 Net operating loss carryforwards 26 32 Foreign tax credit carryforwards 1 — Other — — Gross deferred tax assets 71 77 Valuation allowances (31) (34) Net deferred tax assets 40 43 Deferred tax liabilities attributable to: Property, plant and equipment 177 185 Identified intangibles 39 37 Other 3 11 Gross deferred tax liabilities 219 233 Net deferred tax liabilities $ 179 $ 190 Of the $26 million of tax-effected net operating loss carryforwards as of December 31, 2018, approximately $11 million are for state loss carryforwards and approximately $15 million are for foreign loss carryforwards. 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 . 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, 2018, the Company maintains valuation allowances of $11 million for state loss carryforwards, $3 million for state credits and $14 million for foreign loss carryforwards that management has determined will more likely than not expire prior to realization. As of December 31, 2017, the Company maintained 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. In addition, the Company maintains valuation allowances on foreign subsidiaries’ net deferred tax assets of $3 million and $2 million, respectively, for the years ended December 31, 2018 and 2017. A reconciliation of the U.S. federal statutory tax rate to the Company’s effective tax rate follows: 2018 2017 2016 Provision for tax at U.S. statutory rate 21.0 % 35.0 % 35.0 % Tax rate difference on foreign income 5.3 (5.6) (5.5) State and local taxes, net — 0.7 0.3 Tax impact of fluctuations in Mexican peso to U.S. dollar — (0.5) 2.4 Net impact of U.S. foreign tax credits 0.5 0.3 (2.3) Net impact of U.S.-Canada tax settlement 0.3 (1.3) 3.2 Net impact of valuation allowance in Argentina 1.0 2.0 1.0 Net impact of transition tax 0.6 2.7 — Net impact of U.S. deferred tax remeasurement — (4.9) — Net impact of provision for taxes on unremitted earnings 0.3 4.3 0.5 Other items, net (2.1) (1.9) (1.5) Provision at effective tax rate 26.9 % 30.8 % 33.1 % The Company has significant operations in Mexico, Pakistan, and Colombia where the statutory tax rates are 30 percent, 29 percent and 37 percent in 2018, 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 the Company’s effective tax rate are a reduction in the U.S. corporate tax rate from 35 percent to 21 percent, the imposition of a U.S. tax on global intangible low-taxed income (“GILTI”) and the foreign-derived intangible income (“FDII”) deduction. The TCJA also provided for a one-time transition tax on the deemed repatriation of cumulative foreign earnings as of December 31, 2017, and eliminated the tax on dividends from 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. In the fourth quarter of 2017, the Company calculated a provisional impact of the TCJA in accordance with SAB 118 and its understanding of the TCJA, including published guidance as of December 31, 2017. During the third and fourth quarter of 2018, the Company recorded $2 million and $1 million, respectively, of net incremental tax expense as the Company finalized its TCJA expense based on additional guidance from federal and state regulatory agencies. The following table summarizes the provisional and final impact of the TCJA: Provisional 2017 Final 2017 (in millions) TCJA Impact TCJA Impact One-time transition tax $ 21 $ Remeasurement of deferred tax assets and liabilities (38) (38) Net impact of provision for taxes on unremitted earnings 33 Other items, net 7 Net impact of the TCJA $ 23 $ 26 Pro-form results related to TCJA have not been presented, as the effect would not be material to the Company’s results for the periods presented. Under a provision in the TCJA, all of the undistributed earnings of the Company’s 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 the effective tax rate, was recorded in income from continuing operations in the fourth quarter of 2017. During the third quarter of 2018, the Company finalized the transition tax analysis and recorded an incremental $4 million liability, or 0.6 percentage points on the effective tax rate. 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, in the fourth quarter of 2017. Due to a change in the U.S. tax treatment of dividends received from foreign subsidiaries, in the fourth quarter of 2017, the Company 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. During the second half of 2018, the Company finalized the provision for taxes on unremitted earnings and recorded an additional $2 million liability, or 0.3 percentage points on the effective rate. The net impact of the TCJA on the Company’s 2017 tax expense included 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. During the second half of 2018, the Company finalized other items, net and recorded a net $3 million benefit, or 0.4 percentage points on the effective tax rate. In the fourth quarter of 2018, the Company made an accounting election to treat taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) 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 was 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. As a result of the final settlement, the Company received refunds totaling $42 million from Canadian revenue agencies and recorded $2 million, or 0.3 percentage points on the effective tax rate, of interest and penalties through tax expense in 2018. The Company uses the U.S. dollar as the functional currency for its subsidiaries in Mexico. In 2017 and 2016, a decline in value of the Mexican peso versus the U.S. dollar increased tax expense by $4 million and $18 million, or 0.5 percentage points and 2.4 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 was no corresponding gain or loss in pre-tax income. During 2018, 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 $6 million, or 1.0 percentage points on the effective tax rate, compared to $16 million, or 2.0 percentage points on the effective tax rate, and $7 million, or 1.0 percentage points on the effective tax rate in 2017 and 2016, respectively. As of December 31, 2017, for U.S. tax purposes all of the undistributed earnings and profits of the Company’s foreign subsidiaries were deemed to be repatriated and subjected to a transition tax. In addition, during 2017 and 2018 the Company recorded a liability of $33 million and $2 million, respectively, for foreign withholding and state income taxes on certain unremitted earnings from foreign subsidiaries. However, the Company has not provided for foreign withholding taxes, state income taxes and federal and state taxes on foreign currency gains/losses on distributions of approximately $3.0 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 2018 and 2017 is as follows: (in millions) 2018 2017 Balance at January 1 $ 39 $ 86 Additions for tax positions related to prior years — — Reductions for tax positions related to prior years (2) — Additions based on tax positions related to the current year — 12 Settlements — (58) Reductions related to a lapse in the statute of limitations (7) (1) Balance at December 31 $ 30 $ 39 Of the $30 million of unrecognized tax benefits as of December 31, 2018, $10 million represents the amount that, if recognized, could affect the effective tax rate in future periods. The remaining $20 million includes an offset of $19 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, 2018. The accrued interest expense was $2 million as of December 31, 2017. 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 2015 to 2018. In general, the Company’s foreign subsidiaries remain subject to audit for years 2012 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, 2018. The Company believe it is reasonably possible approximately $8 million of unrecognized tax benefits may be recognized within 12 months of December 31, 2018 as a result of a lapse of the statute of limitations. Of which, $4 million, could affect the effective tax rate. 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, 2018 | |
Benefit Plans | |
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 unfunded and payments to plan participants are made directly 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. Pension Obligation and Funded Status: The changes in pension benefit obligations and plan assets during 2018 and 2017, 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, 2018 and 2017, were as follows: U.S. Plans Non-U.S. Plans (in millions) 2018 2017 2018 2017 Benefit obligation At January 1 $ 393 $ 367 $ 248 $ 223 Service cost 6 6 3 3 Interest cost 13 13 10 11 Benefits paid (26) (23) (12) (12) Actuarial (gain) loss (27) 30 (8) 7 Curtailment/settlement/amendments (2) — — — Foreign currency translation — — (18) 16 Benefit obligation at December 31 $ 357 $ 393 $ 223 $ 248 Fair value of plan assets At January 1 $ 404 $ 368 $ 235 $ 211 Actual return on plan assets (25) 59 — 17 Employer contributions 2 — 4 5 Benefits paid (26) (23) (12) (12) Plan settlements (2) — — — Foreign currency translation — — (20) 14 Fair value of plan assets at December 31 $ 353 $ 404 $ 207 $ 235 Funded status $ (4) $ 11 $ (16) $ (13) Amounts recognized in the Consolidated Balance Sheets as of December 31, 2018 and 2017 were as follows: U.S. Plans Non-U.S. Plans (in millions) 2018 2017 2018 2017 Non-current asset $ 7 $ 23 $ 32 $ 37 Current liabilities (1) (2) (1) (1) Non-current liabilities (10) (10) (47) (49) Net asset (liability) recognized $ (4) $ 11 $ (16) $ (13) 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, 2018 and 2017 were as follows: U.S. Plans Non-U.S. Plans (in millions) 2018 2017 2018 2017 Net actuarial loss $ 40 $ 21 $ 57 $ 55 Transition obligation — — 1 1 Prior service credit (6) (6) (1) (1) Net amount recognized $ 34 $ 15 $ 57 $ 55 The increase in the net amount recognized in accumulated comprehensive loss at December 31, 2018, for the U.S. plans as compared to December 31, 2017, is mainly due to the actual return on assets being lower than the expected return on assets. This is partially offset by the effect of the increase 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, 2018, for the Non-U.S. plans, as compared to December 31, 2017, is mainly due to the actual return on assets being lower than the expected return on assets. This is partially offset by the effect of the increase 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 $543 million and $603 million at December 31, 2018 and 2017, 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) 2018 2017 2018 2017 Projected benefit obligation $ 11 $ 12 $ 49 $ 51 Accumulated benefit obligation 9 11 41 41 Fair value of plan assets — — 2 2 All U.S. plans and most non-U.S. plans value the vested benefit obligation based on the actuarial present value of the vested benefits to which employees are currently entitled based on employees’ expected date of separation or retirement. Components of net periodic benefit cost consist of the following for the years ended December 31, 2018, 2017, and 2016: Year Ended December 31, U.S. Plans Non-U.S. Plans (in millions) 2018 2017 2016 2018 2017 2016 Service cost $ 6 $ 6 $ 6 $ 3 $ 3 $ 3 Interest cost 13 13 14 10 11 10 Expected return on plan assets (21) (21) (20) (9) (10) (10) Amortization of actuarial loss — — 1 2 2 2 Amortization of prior service credit — (1) — — — — Settlement loss — — — — — 1 Net periodic benefit cost $ (2) $ (3) $ 1 $ 6 $ 6 $ 6 The service cost component of net periodic benefit cost is presented within either cost of sales or operating expenses on the Consolidated Statements of Income. The interest cost, expected return on plan assets, amortization of actuarial loss, amortization of prior service credit and settlement loss components of net periodic benefit cost are presented as other, non-operating income on the Consolidated Statements of Income. For the U.S. plans, the Company estimates that net periodic benefit cost for 2019 will include approximately $1 million relating to the amortization of the prior service credit included in accumulated other comprehensive loss as of December 31, 2018. For the non-U.S. plans, the Company estimates that net periodic benefit cost for 2019 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 2018 2017 2016 2018 2017 2016 Net actuarial loss (gain) $ 19 $ (7) $ 10 $ 4 $ (3) $ 6 Prior service credit — — (6) — — (1) Amortization of actuarial loss — — (1) (2) (2) (2) Amortization of prior service credit — 1 — — — — Total recorded in other comprehensive income 19 (6) 3 2 (5) 3 Net periodic benefit cost (2) (3) 1 6 6 6 Total recorded in other comprehensive income and net periodic benefit cost $ 17 $ (9) $ 4 $ 8 $ 1 $ 9 The following weighted average assumptions were used to determine the Company’s obligations under the pension plans: U.S. Plans Non-U.S. Plans 2018 2017 2018 2017 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 2018 2017 2016 2018 2017 2016 Discount rate % % % % % % Expected long-term return on plan assets Rate of compensation increase For 2018, the Company assumed an expected long-term rate of return on assets of 5.30 percent for U.S. plans and approximately 3.86 percent for Canadian plans. In developing the expected long-term rate of return assumption on plan assets, which consist mainly of U.S. and Canadian debt and equity 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 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 its 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. The Company’s weighted average asset allocation as of December 31, 2018 and 2017 for U.S. and non-U.S. pension plan assets is as follows: U.S. Plans Non-U.S. Plans Asset Category 2018 2017 2018 2017 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, 2018 (in millions) Level 1 Level 2 Level 3 Total U.S. Plans: Equity index: U.S. ( a ) $ — $ 33 $ — $ 33 International ( b ) — 35 — 35 Fixed income index: Long bond ( c ) — 258 — 258 Long government bond ( d ) — 24 — 24 Cash ( e ) — 3 — 3 Total U.S. Plans $ — $ 353 $ — $ 353 Non-U.S. Plans: Equity index: U.S. ( a ) $ — $ 3 $ — $ 3 Canada ( f ) — 13 — 13 International ( b ) — 15 — 15 Real estate ( g ) — 2 — 2 Fixed income index: Intermediate bond (h) — 34 — 34 Long bond ( i ) — 99 — 99 Other (j) — 24 — 24 Cash ( e ) 2 15 — 17 Total Non-U.S. Plans $ 2 $ 205 $ — $ 207 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 govt 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 (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 2018, the Company made cash contributions of $2 million and $4 million to its U.S. and non-U.S. pension plans, respectively. The Company anticipates that in 2019 it will make cash contributions of $1 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 2019 $ 19 $ 11 2020 20 11 2021 22 11 2022 22 12 2023 24 13 Years 2024 - 2028 123 66 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 $21 million, $22 million, and $20 million in 2018, 2017, and 2016, 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 2018 and 2017, and the amounts recognized in the Company’s Consolidated Balance Sheets at December 31, 2018 and 2017, are as follows: (in millions) 2018 2017 Accumulated postretirement benefit obligation At January 1 $ 70 $ 67 Service cost 1 1 Interest cost 3 3 Employee contributions — 1 Plan curtailments (1) — Actuarial (gain) loss (2) 2 Benefits paid (4) (4) Foreign currency translation (3) — At December 31 64 70 Fair value of plan assets — — Funded status $ (64) $ (70) Amounts recognized in the Consolidated Balance Sheets consist of: (in millions) 2018 2017 Current liabilities $ (4) $ (4) Non-current liabilities (60) (66) Net liability recognized $ (64) $ (70) 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, 2018 and 2017 were as follows: (in millions) 2018 2017 Net actuarial loss $ 8 $ 11 Prior service credit Net amount recognized $ 4 $ 5 Components of net periodic benefit cost consisted of the following for the years ended December 31, 2018, 2017, and 2016: Year Ended December 31, (in millions) 2018 2017 2016 Service cost $ 1 $ 1 $ 1 Interest cost 3 3 2 Amortization of prior service credit (2) (3) (2) Net periodic benefit cost $ 2 $ 1 $ 1 The service cost component of net periodic benefit cost is presented within either cost of sales or operating expenses on the Consolidated Statements of Income. The interest cost and amortization of prior service credit components of net periodic benefit cost are presented as other, non-operating income on the Consolidated Statements of Income. The Company estimates that postretirement benefit expense for these plans for 2019 will include approximately $2 million relating to the amortization of the prior service credit included in accumulated other comprehensive income as of December 31, 2018. Total amounts recorded in other comprehensive income and net periodic benefit cost was as follows: (in millions, pre-tax) 2018 2017 2016 Net actuarial loss (gain) $ (3) $ 2 $ 2 Amortization of prior service credit 2 3 2 New prior service credit — — — Total recorded in other comprehensive income (1) 5 4 Net periodic benefit cost 2 1 1 Total recorded in other comprehensive income and net periodic benefit cost $ 1 $ 6 $ 5 The following weighted average assumptions were used to determine the Company’s obligations under the postretirement plans: 2018 2017 Discount rate % % The following weighted average assumptions were used to determine the Company’s net postretirement benefit cost: 2018 2017 2016 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, 2018: U.S. Canada Brazil 2018 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, 2018, are as follows: (in millions) 2018 One-percentage point increase in trend rates: - Increase in service cost and interest cost components $ 1 - Increase in year-end benefit obligations 5 One-percentage point decrease in trend rates: - Decrease in service cost and interest cost components 1 - Decrease in year-end benefit obligations 7 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) 2019 $ 4 2020 4 2021 4 2022 5 2023 5 Years 2024 - 2028 23 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, 2018, 2017, and 2016, the Company made regular contributions of $12 million, $13 million, and $14 million, respectively, to this multi-employer plan. The Company cannot currently estimate the amount of multi-employer plan contributions that will be required in 2019 and future years, but these contributions could increase due to healthcare cost trends. The collective bargaining agreements associated with this plan expire during 2019 - 2023. |
Supplementary Information
Supplementary Information | 12 Months Ended |
Dec. 31, 2018 | |
Supplementary Information | |
Supplementary Information | NOTE 11 – Supplementary Information Consolidated Balance Sheets (in millions) 2018 2017 Accounts receivable, net: Accounts receivable — trade $ 802 $ 760 Accounts receivable — other 157 209 Allowance for doubtful accounts (8) (8) Total accounts receivable, net $ 951 $ 961 Inventories: Finished and in process $ 522 $ 495 Raw materials 250 278 Manufacturing supplies 52 50 Total inventories $ 824 $ 823 Accrued liabilities: Compensation-related costs $ 81 $ 101 Income taxes payable 27 22 Unrecognized tax benefits — — Dividends payable 42 44 Accrued interest 15 15 Taxes payable other than income taxes 33 37 Other 127 125 Total accrued liabilities $ 325 $ 344 Non-current liabilities: Employees’ pension, indemnity, and postretirement 122 121 Other 95 106 Total non-current liabilities $ 217 $ 227 Consolidated Statements of Income (in millions) 2018 2017 2016 Other income, net: Insurance settlement $ — $ 9 $ — Value-added tax recovery 5 6 5 Other 5 3 (1) Other income, net $ 10 $ $ (in millions) 2018 2017 2016 Financing costs, net: Interest expense, net of amounts capitalized (a) $ 81 $ 79 $ 73 Interest income (9) (11) (10) Foreign currency transaction losses 14 5 3 Financing costs, net $ 86 $ 73 $ 66 (a) Interest capitalized amounted to $3 million, $4 million, and $4 million in 2018, 2017 and 2016, respectively. Consolidated Statements of Cash Flow (in millions) 2018 2017 2016 Other non-cash charges to net income: Share-based compensation expense $ 21 $ 26 $ 28 Other 18 13 16 Total other non-cash charges to net income $ 39 $ 39 $ 44 (in millions) 2018 2017 2016 Interest paid $ 73 $ 77 $ 59 Income taxes paid 231 289 254 |
Equity
Equity | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 and 2017. Treasury stock: On October 22, 2018, the Board of Directors authorized a new stock repurchase program permitting the Company to purchase up to an additional 8 million of its outstanding common shares from November 5, 2018 through December 31, 2023. On December 12, 2014, the Board of Directors authorized a 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 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. On November 5, 2018, the Company entered into a Variable Timing Accelerated Share Repurchase (“ASR”) program with JPMorgan (“JPM”). Under the ASR program, the Company paid $455 million on November 5, 2018 and acquired 4 million shares of its common stock having an approximate value of $423 million. At the end of the program, the Company and JPM will settle any difference between the initial price and average daily volume-weighted average price (“VWAP”) less the agreed upon discount during the term of the agreement. On February 5, 2019 the Company was notified that JPM finalized the ASR with a resulting VWAP of $98.04 that was less than initially paid. The Company elected to settle the difference in cash resulting in a $63 million of the upfront payment returned to the Company on February 6, 2019 and lowering the total cost of repurchasing the 4.0 million shares of common stock to $392 million. In 2018, the Company repurchased 5.8 million common shares in open market transactions at a cost of $657 million. In 2017, the Company repurchased 1.0 million common shares in open market transactions at a cost of $123 million. Set forth below is a reconciliation of common stock share activity for the years ended December 31, 2018, 2017, and 2016: (Shares of common stock, in thousands) Issued Held in Treasury Outstanding 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 Issuance of restricted stock units as compensation — (100) 100 Performance shares and other share-based awards — (68) 68 Stock options exercised — (209) 209 Purchase/acquisition of treasury stock — 5,847 (5,847) Balance at December 31, 2018 77,811 11,285 66,526 Share-based payments : The following table summarizes the components of the Company’s share-based compensation expense for the last three years: (in millions) 2018 2017 2016 Stock options: Pre-tax compensation expense $ 5 $ 7 $ 9 Income tax benefit (1) (2) (3) Stock option expense, net of income taxes 4 5 6 RSUs: Pre-tax compensation expense 12 13 12 Income tax benefit (2) (4) (5) RSUs, net of income taxes 10 9 7 Performance shares and other share-based awards: Pre-tax compensation expense 4 6 7 Income tax benefit — (2) (3) Performance shares and other share-based compensation expense, net of income taxes 4 4 4 Total share-based compensation: Pre-tax compensation expense 21 26 28 Income tax benefit (3) (8) (11) Total share-based compensation expense, net of income taxes $ 18 $ 18 $ 17 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, 2018, 3.3 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 215 thousand shares and 278 thousand shares for the years ended December 31, 2018 and 2017, 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, 2018 2017 2016 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: Number of Options (in thousands) Weighted Average Exercise Price per Share Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of December 31, 2017 2,095 $ 71.81 5.87 $ 142 Granted 215 133.61 Exercised (209) 48.50 Cancelled (22) 99.81 Outstanding as of December 31, 2018 2,079 $ 80.25 5.51 $ 42 Exercisable as of December 31, 2018 1,599 $ 67.85 4.68 $ 42 For the years ended December 31, 2018, 2017, and 2016, cash received from the exercise of stock options was $10 million, $20 million, and $29 million, respectively. As of December 31, 2018, 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 1.8 years. Additional information pertaining to stock option activity is as follows: Year Ended December 31, (dollars in millions, except per share) 2018 2017 2016 Weighted average grant date fair value of stock options granted (per share) $ 24.01 $ 23.90 $ 18.73 Total intrinsic value of stock options exercised 15 35 46 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, 2017 387 $ Granted 114 Vested (137) Cancelled (20) Non-vested at December 31, 2018 344 $ The total fair value of RSUs that vested in 2018, 2017, and 2016 was $15 million, $18 million, and $15 million, respectively. At December 31, 2018, the total remaining unrecognized compensation cost related to RSUs was $13 million which will be amortized on a weighted-average basis over approximately 1.8 years. Recognized compensation cost related to unvested RSUs is included in share-based payments subject to redemption in the Consolidated Balance Sheets and totaled $26 million and $25 million at December 31, 2018 and 2017, 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 27 thousand, 38 thousand, and 44 thousand performance shares in 2018, 2017, and 2016, respectively. The weighted average fair value of the shares granted during 2018, 2017, and 2016 was $141.91, $114.08, and $131.34, respectively. The 2015 performance share award vested in February 2018, achieving a 200 percent pay out of the grant, or 92 thousand total vested shares. As of December 31, 2018, the performance awards granted in 2018, 2017, and 2016 are estimated to pay out at zero percent, respectively. There were 16 thousand shares cancelled during the year ended December 31, 2018. As of December 31, 2018, 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 $10 million and $11 million at December 31, 2018 and 2017, 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 2018, 2017, and 2016. At December 31, 2018, there were approximately 191 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, 2016, 2017 and 2018 is presented below: (in millions) Cumulative Translation Adjustment Deferred (Loss) Gain on Hedging Activities Pension and Postretirement Adjustment Unrealized (Loss) Gain on Investment Accumulated Other Comprehensive Loss 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) Other comprehensive (loss) income before reclassification adjustments (129) 8 (20) — (141) Amount reclassified from accumulated OCI — 6 — — 6 Tax (provision) benefit — (4) 5 — 1 Net other comprehensive (loss) income (129) 10 (15) — (134) Adoption of ASU 2016-01* — — — (2) (2) Adoption of ASU 2018-02* — (2) (3) — (5) Other — (2) (3) (2) (7) Balance, December 31, 2018 $ (1,080) $ (5) $ (69) $ — $ (1,154) * See Note 2 for further discussion on adoption of these standards. 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) 2018 2017 2016 Statements of Income (Losses) gains on cash flow hedges: Commodity contracts $ (6) $ (5) $ (45) Cost of sales Foreign currency contracts 1 1 (2) Net sales/Cost of sales Interest rate contracts (1) (2) (2) Financing costs, net Gains related to pension and other postretirement obligations - 2 (1) (a) Total before-tax reclassifications (6) (4) (50) Tax benefit 2 1 16 Total after-tax reclassifications $ (4) $ (3) $ (34) (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. 2018 2017 2016 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 $ 443 70.9 $ 6.25 $ 519 72.0 $ 7.21 $ 485 72.3 $ 6.70 Effect of Dilutive Securities: Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards 0.9 1.5 1.8 Diluted EPS $ 443 71.8 $ 6.17 $ 519 73.5 $ 7.06 $ 485 74.1 $ 6.55 |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2018 | |
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) 2018 2017 2016 Net sales to unaffiliated customers: North America: Net sales before shipping and handling costs $ 3,857 $ 3,843 $ 3,734 Less: shipping and handling costs 346 314 287 Net sales $ 3,511 $ 3,529 $ 3,447 South America: Net sales before shipping and handling costs $ 988 $ 1,052 $ 1,054 Less: shipping and handling costs 45 45 44 Net sales $ 943 $ 1,007 $ 1,010 Asia Pacific: Net sales before shipping and handling costs $ 837 $ 772 $ 738 Less: shipping and handling costs 34 32 29 Net sales $ 803 $ 740 $ 709 EMEA: Net sales before shipping and handling costs $ 607 $ 577 $ 556 Less: shipping and handling costs 23 21 18 Net sales $ 584 $ 556 $ 538 (in millions) Operating income: 2018 2017 2016 North America $ 545 $ 654 $ 606 South America 99 81 90 Asia Pacific 104 115 113 EMEA 116 114 107 Corporate (97) (86) (88) Subtotal 767 878 828 Restructuring/impairment charges (a) (64) (38) (19) Acquisition/integration costs — (4) (3) Charge for fair value markup of acquired inventory — (9) — Insurance settlement — 9 — Total operating income 703 836 806 Financing costs, net 86 73 66 Other, non-operating income (4) (6) (2) Income before income taxes $ 621 $ 769 $ 742 (a) For 2018, includes $49 million of restructuring expenses as part of the Cost Smart cost of sales program in relation to the cessation of wet-milling at the Stockton, California plant, $11 million of restructuring costs related to Cost Smart SG&A program, $3 million of costs related to the North America finance transformation program, and $1 million of costs related to the leaf extraction process in Brazil. 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 the 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 the optimization initiative in North America and South America, and $2 million of costs attributable to the Port Colborne plant sale. For 2018, includes $49 million of restructuring expenses as part of the Cost Smart cost of sales program in relation to the cessation of wet-milling at the Stockton, California plant, $11 million of restructuring costs related to Cost Smart SG&A program, $3 million of costs related to the North America finance transformation program, and $1 million of costs related to the leaf extraction process in Brazil. 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 the 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 the optimization initiative in North America and South America, and $2 million of costs attributable to the Port Colborne plant sale.vFor 2018, includes $49 million of restructuring expenses as part of the Cost Smart cost of sales program in relation to the cessation of wet-milling at the Stockton, California plant, $11 million of restructuring costs related to Cost Smart SG&A program, $3 million of costs related to the North America finance transformation program, and $1 million of costs related to the leaf extraction process in Brazil. 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 the 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 the optimization initiative in North America and South America, and $2 million of costs attributable to the Port Colborne plant sale.For 2018, includes $49 million of restructuring expenses as part of the Cost Smart cost of sales program in relation to the cessation of wet-milling at the Stockton, California plant, $11 million of restructuring costs related to Cost Smart SG&A program, $3 million of costs related to the North America finance transformation program, and $1 million of costs related to the leaf extraction process in Brazil. 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 the 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 the optimization initiative in North America and South America, and $2 million of costs attributable to the Port Colborne plant sale. As of December 31, (in millions) 2018 2017 Total assets: North America (a) $ 3,737 $ 3,967 South America 711 812 Asia Pacific 792 774 EMEA 488 527 Total $ 5,728 $ 6,080 (a) For purposes of presentation, North America includes Corporate assets. (in millions) 2018 2017 2016 Depreciation and amortization: North America (a) $ 180 $ 140 $ 130 South America 24 27 26 Asia Pacific 27 25 23 EMEA 16 17 17 Total $ 247 $ 209 $ 196 Mechanical stores expense (b) : North America (a) $ 38 $ 37 $ 37 South America 11 12 12 Asia Pacific 5 5 5 EMEA 3 3 3 Total $ 57 $ 57 $ 57 Capital expenditures and mechanical stores purchases: North America (a) $ 232 $ 180 $ 167 South America 61 50 56 Asia Pacific 39 51 41 EMEA 18 33 20 Total $ 350 $ 314 $ 284 (a) For purposes of presentation, North America includes Corporate activities of depreciation, amortization, capital expenditures, and mechanical stores purchase, respectively. (b) 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) 2018 2017 2016 U.S. $ 2,133 $ 2,191 $ 2,117 Mexico 997 952 955 Brazil 462 519 522 Canada 381 385 375 Korea 286 275 266 Others 1,582 1,510 1,469 Total $ 5,841 $ 5,832 $ 5,704 The following table presents long-lived assets (excluding intangible assets and deferred income taxes) by country at December 31: Long-lived Assets (in millions) 2018 2017 U.S. $ 1,004 $ 977 Mexico 318 306 Brazil 207 235 Canada 165 179 Thailand 137 137 Germany 129 133 Korea 110 109 Others 259 284 Total $ 2,329 $ 2,360 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies | |
Commitments and Contingencies | NOTE 14 – Commitments and Contingencies The Company is currently subject to claims and suits arising in the ordinary course of business, including labor matters, certain environmental proceedings, and other commercial claims. The Company also routinely receive 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 will be material to us. There can be no assurance, however, that such claims, suits or investigations or those arising in the future, whether taken individually or in the aggregate, will not have a material adverse effect on the Company’s financial condition or results of operations. |
Quarterly Financial Data (Unaud
Quarterly Financial Data (Unaudited) | 12 Months Ended |
Dec. 31, 2018 | |
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) 2018 Net sales before shipping and handling costs $ 1,581 $ 1,608 $ 1,563 $ 1,537 Less: shipping and handling costs 112 112 113 111 Net sales 1,469 1,496 1,450 1,426 Gross profit 354 360 334 320 Net income attributable to Ingredion 140 114 95 Basic earnings per common share of Ingredion 1.94 1.59 1.33 1.38 Diluted earnings per common share of Ingredion 1.90 1.57 1.32 1.36 Per share dividends declared $ 0.60 $ 0.60 $ 0.625 $ 0.625 (in millions, except per share amounts) 1 st QTR (e) 2 nd QTR (f) 3 rd QTR (g) 4 th QTR (h) 2017 Net sales before shipping and handling costs $ 1,552 $ 1,558 $ 1,591 $ 1,543 Less: shipping and handling costs 99 101 106 106 Net sales 1,453 1,457 1,485 1,437 Gross profit 351 373 388 360 Net income attributable to Ingredion 124 130 166 99 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 (a) In the first quarter of 2018, the Company recorded $3 million in after-tax, net restructuring costs. (b) In the second quarter of 2018, the Company recorded $5 million in after-tax, net restructuring costs and $2 million in after-tax, interest penalty related to an income tax settlement. (c) In the third quarter of 2018, the Company recorded a $27 million in after-tax, net restructuring costs, $2 million in after-tax charges for the refinement of provisional charges related to the enactment of the TCJA, and $2 million after-tax gain related to a refinement of reserve for an income tax settlement. (d) In the fourth quarter of 2018, the Company recorded a $16 million in after-tax, net restructuring costs and $1 million in after-tax charges for the refinement of provisional charges related to the enactment of the TCJA. (e) 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. (f) 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. (g) 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. (h) 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. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2018 | |
Summary of Significant Accounting Standards and 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). 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. The U.S. dollar is the functional currency for the Company’s subsidiaries in Mexico and as of July 1, 2018, in Argentina. In the second quarter of 2018, the Argentine peso rapidly devalued relative to the U.S. dollar, which along with increased inflation, resulted in a three-year cumulative inflation in that country exceeded 100 percent as of June 30, 2018. As a result, the Company elected to adopt highly inflationary accounting as of July 1, 2018 for its Argentina affiliate in accordance with GAAP. Under highly inflationary accounting, Argentina’s functional currency becomes the U.S. dollar. 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 2018, 2017 and 2016, the Company incurred foreign currency transaction net losses of $14 million, $5 million, and $3 million, respectively. The Company’s accumulated other comprehensive loss included in equity on the Consolidated Balance Sheets includes cumulative translation losses of $1.1 billion and $1 billion at December 31, 2018 and 2017, respectively. |
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 are included in other assets in the Consolidated Balance Sheets. The Company holds equity and cost method investments, and equity securities as of December 31, 2018. 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. In December 2018, the Company entered into a $15 million equity method investment with Verdient Foods, Inc., a Canadian company based in Vanscoy, Saskatchewan. Investments are being made within the existing facility to make pulse-based protein concentrates and flours from peas, lentils and fava beans for human food applications . The Company did not have any investments accounted for under the equity method at December 31, 2017. 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 income, net in accordance with ASC 825 . 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, 2018 and 2017. |
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 $217 million, $179 million, and $171 million for the years ended December 31, 2018, 2017, and 2016, 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 indefinite-lived intangible assets | Goodwill and other intangible assets: ASC Topic 350 requires that an entity test its goodwill balance for impairment at the reporting unit level at least annually. Historically, the Company has performed this test on October 1, the first day of its fourth quarter. During the first half of 2018, the Company elected to change the timing of its annual goodwill impairment test and annual indefinite-lived intangibles impairment test from the first day of the fourth quarter to the first day of the third quarter. Management believes this voluntary change is preferable as the timing of its annual impairment testing will better align with its annual strategic planning process. This impairment test date change was applied prospectively beginning on July 1, 2018 and had no effect on the Company’s consolidated financial statements. Goodwill ($791 million and $803 million at December 31, 2018 and 2017, 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 $460 million and $493 million at December 31, 2018 and 2017, respectively. The carrying value of goodwill by reportable business segment at December 31, 2018 and 2017 was as follows: North South Asia (in millions) America America Pacific EMEA Total 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 Acquisitions — — — — — Currency translation — (4) (3) (5) (12) Balance at December 31, 2018 $ 600 $ 22 $ 104 $ 65 $ 791 (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, 2018 and 2017 were as follows: North South Asia ( in millions) America America Pacific EMEA Total Goodwill before impairment charges $ 601 $ 59 $ 228 $ 70 $ 958 Accumulated impairment charges (1) (33) (121) — (155) Balance at December 31, 2017 600 26 107 70 803 Goodwill before impairment charges 601 55 225 65 946 Accumulated impairment charges (1) (121) — (155) Balance at December 31, 2018 $ 600 $ 22 $ 104 $ 65 $ 791 The following table summarizes the Company’s other intangible assets for the periods presented: As of December 31, 2018 (in millions) Gross Accumulated Amortization Net Weighted Average Useful Life (years) Trademarks/tradenames (indefinite-lived) $ 178 $ — $ 178 — Customer relationships 325 (77) 248 20 Technology 103 (80) 23 9 Other 21 (10) 11 16 Total other intangible assets $ 627 $ (167) $ 460 18 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 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 2018, $30 million in 2017, and $25 million in 2016. Based on acquisitions completed through December 31, 2018, intangible asset amortization expense for the next five years is shown below. (in millions) Year Amortization Expense 2019 $ 29 2020 27 2021 19 2022 18 2023 18 Balance thereafter 171 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 July 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 July 1, 2018, it was more likely than not that the fair value of its reporting units was greater than their carrying value. The Company continues to monitor its 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. 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 its qualitative assessment, the Company concluded that as of July 1, 2018, 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 accounts for revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers, which was adopted on January 1, 2018, using the full retrospective method. The recently adopted accounting standard is more fully described in the Company's Recently Adopted Accounting Standards and Note 4 of the Notes to the Consolidated Financial Statements. |
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 70.9 million for 2018, 72.0 million for 2017 and 72.3 million for 2016. 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 71.8 million, 73.5 million and 74.1 million for 2018, 2017 and 2016, respectively. Approximately 0.5 million, 0.3 million, and 0.0 share-based awards of common stock were excluded in 2018, 2017, and 2016, 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 and New accounting standards | Recently Adopted Accounting Standards ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606): In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606) that introduced a 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. The ASU 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 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. As of January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers , and all the related amendments (“new revenue standard”). The Company performed detailed procedures to review its revenue contracts held with its customers and did not identify any changes to the nature, amount, timing or uncertainty of revenue and cash flows arising from the contracts with customers as a result of the new revenue standard. The new revenue standard requires the Company to recognize revenue under the core principle to depict the transfer of products to customers in an amount reflecting the consideration the Company expects to receive. In order to achieve that core principle, the Company applies the following five-step approach: (1) identify the contract with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when a performance obligation is satisfied. The Company identified customer purchase orders, which in some cases are governed by a master sales agreement, as the contracts with its customers. For each contract, the Company considers the transfer of products, each of which is distinct, to be the identified performance obligation. In determining the transaction price for the performance obligation, the Company evaluates whether the price is subject to adjustment to determine the consideration to which the Company expects to be entitled. The pricing model can be fixed or variable within the contract. The variable pricing model is based on historical commodity pricing and is determinable prior to completion of the performance obligation. Additionally, the Company has certain sales adjustments for volume incentive discounts and other discount arrangements that reduce the transaction price. The reduction of transaction price is estimated using the expected value method based on an analysis of historical volume incentives or discounts, over a period of time considered adequate to account for current pricing and business trends. Historically, actual volume incentives and discounts relative to those estimated and included when determining the transaction price have not materially differed. The product price as specified in the contract, net of any discounts, is considered the standalone selling price as it is an observable input which depicts the price as if sold to a similar customer in similar circumstances. Payment is received shortly after the performance obligation is satisfied, therefore, the Company has elected the practical expedient under ASC 606-10-32-18 to not assess whether a contract has a significant financing component. Revenue is recognized when the Company’s performance obligation is satisfied and control is transferred to the customer, which occurs at a point in time, either upon delivery to an agreed upon location or to the customer. Further, in determining whether control has transferred, the Company considers if there is a present right to payment and legal title, along with risks and rewards of ownership having transferred to the customer. Historically, the Company included warehousing costs as a reduction of net sales before shipping and handling costs. In connection with the adoption of the new revenue standard, the Company determined these warehousing costs which were previously included as a reduction in net sales before shipping and handling costs are more appropriately classified as fulfillment activities based on the guidance of ASC 606. Therefore, upon adoption of the new revenue standard, the Company elected to include these costs within shipping and handling costs. The Company has elected to continue to classify shipping and handling costs as a reduction of net sales after implementing the new revenue standard consistent with its historical presentation. The Company has elected to make this adjustment on a retrospective basis, resulting in the change to the Consolidated Statements of Income shown below. The Company notes that the reclassification does not change reported net sales. 2017 2016 (in millions) As Reported As Adjusted As Reported As Adjusted Consolidated Statements of Income: Net sales before shipping and handling costs $ 6,180 $ 6,244 $ 6,022 $ 6,082 Less: shipping and handling costs 348 412 318 378 Net sales $ 5,832 $ 5,832 $ 5,704 $ 5,704 The Company used the full retrospective method, which requires the restatement of all previously presented financial results. The adoption of the new standard did not result in any retrospective changes to the Company’s Consolidated Statements of Comprehensive Income, Consolidated Balance Sheets, Consolidated Statements of Equity and Redeemable Equity, or the Consolidated Statements of Cash Flows. For detailed information about the Company’s revenue recognition refer to Note 4 of the Notes to the Consolidated Financial Statements. ASU No. 2017-07, Compensation-Retirement Benefits (Topic 715): 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 requires 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 was effective for annual periods beginning after December 15, 2017. As of January 1, 2018, the Company adopted the amendments to ASC 715. The Company retrospectively adopted the presentation of service cost separate from the other components of net periodic costs for all periods presented. The interest cost, expected return on assets, amortization of prior service costs, net remeasurement, and other costs have been reclassified from cost of sales and operating expenses to other, non-operating income . The Company elected to apply the practical expedient which allows it to reclassify amounts disclosed previously in the retirement benefits note as the basis for applying retrospective presentation for comparative periods as it is impracticable to determine the disaggregation of the cost components for amounts capitalized and amortized in those periods. On a prospective basis, the other components of net periodic benefit costs will not be included in amounts capitalized in inventory. The adoption of the new standard did not result in any retrospective changes to the Company’s Consolidated Statements of Comprehensive Income, Consolidated Balance Sheets, Consolidated Statements of Equity and Redeemable Equity, or the Consolidated Statements of Cash Flows. The adoption of the new standard impacted the presentation of the Company’s previously reported results in the Consolidated Statements of Income and Note 13 of the Consolidated Financial Statements as follows: 2017 2016 (in millions) As Reported As Adjusted As Reported As Adjusted Consolidated Statements of Income: Cost of sales $ 4,359 $ 4,360 $ 4,302 $ 4,303 Gross profit 1,473 1,472 1,402 1,401 Operating expenses 611 616 579 580 Operating income 842 836 808 806 Other, non-operating income - (6) - (2) 2017 2016 (in millions) As Reported As Adjusted As Reported As Adjusted Operating income: North America $ 661 $ 654 $ 610 $ 606 South America 80 81 89 90 Asia Pacific 112 115 111 113 EMEA 113 114 106 107 Corporate (82) (86) (86) (88) Subtotal 884 878 830 828 Total operating income $ 842 $ 836 $ 808 $ 806 Adoption of Highly Inflationary Accounting in Argentina ASC 830, Foreign Currency Matters requires the use of highly inflationary accounting for countries whose cumulative three-year inflation exceeds 100 percent. The Company has been closely monitoring the inflation data and currency volatility in Argentina, where there are multiple data sources for measuring and reporting inflation. In the second quarter of 2018, the Argentine peso rapidly devalued relative to the U.S. dollar, which along with increased inflation, triggered that the three-year cumulative inflation in that country exceeded 100 percent as of June 30, 2018. As a result, the Company adopted highly inflationary accounting as of July 1, 2018 for its affiliate, Ingredion Argentina S.A. (“Argentina”). Under highly inflationary accounting, Argentina’s functional currency becomes the U.S. dollar, and its income statement and balance sheet will be measured in U.S. dollars using both current and historical rates of exchange. The effect of changes in exchange rates on Argentine peso-denominated monetary assets and liabilities will be reflected in earnings in financing costs. For the year ended December 31, 2018, the Company recognized a $2 million charge related to the remeasurement of Argentina’s balance sheet. Net sales of Argentina were approximately three percent of the Company’s consolidated net sales for the year ended December 31, 2018. ASU No. 2016-01, Financial Instruments - Overall (Subtopic 825-10): In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall . The amendments in ASU 2016-01 are intended to improve the recognition, measurement, presentation and disclosure of financial assets and liabilities to provide users of financial statements with information that is more useful for decision-making purposes. Among other changes, ASU 2016-01 requires equity securities to be measured at fair value with changes in fair value recognized through net income and no longer through other comprehensive income. The Company is required to apply the guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The Company adopted the amendments to ASC 825 by recognizing a $2 million cumulative-effect adjustment to retained earnings and accumulated other comprehensive income, classified in “other” on the Consolidated Statements of Equity and Redeemable Equity. Prospectively the Company will recognize changes in the fair value of its equity securities through other income, net on the Consolidated Statements of Income. ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income: In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . This Update allows for the reclassification of stranded tax effects on items resulting from the Tax Cuts and Jobs Act (“TCJA”) from accumulated other comprehensive income to retained earnings. Tax effects unrelated to the 2017 Tax Act are released from AOCI using either the specific identification approach or the portfolio approach based on the nature of the underlying item. The Company early adopted the provisions of ASU No. 2018-02 during the third quarter of 2018 using the specific identification approach and reclassified $5 million from accumulated other comprehensive income to retained earnings, classified in “other” on the Consolidated Statements of Equity and Redeemable Equity. New Accounting Standards 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. The FASB also issued ASU 2018-11 to provide further updates and clarification to this Update. This Update is effective for annual periods beginning after December 15, 2018. The Company will conclude its evaluation on the new guidance in the first quarter of 2019. The Company expects the impact to the Company’s Consolidated Balance Sheet to be material. The Company is in the process of analyzing existing leases, practical expedients, and deploying its implementation strategy. The Company is also in the process of updating its controls and systems, and is still finalizing the new disclosures required in 2019. The Company will adopt ASU 2016-02 at the beginning of its 2019 fiscal year. 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. Under the Update, an entity will continue to perform its annual, or interim, goodwill impairment test to determine if the fair value of a reporting unit is greater than its carrying amount. An entity should then recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value using the results of its Step 1 assessment, with the loss recognized not to exceed the total amount of goodwill allocated to that reporting unit. This Update is effective for annual periods beginning after December 15, 2019, with early adoption permitted. 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. The Company has competed its assessment of these updates, including potential changes to existing hedging arrangements, and has determined the adoption of the guidance will not have a material impact on the Company’s Consolidated Financial Statements. In October 2018, the FASB issued , Derivatives and Hedging (Topic 815) : Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as Benchmark Interest Rate for Hedge Accounting Purposes . This Update permits use of the OIS rate based on the SOFR as a U.S. benchmark interest rate for hedge accounting purposes. The guidance should be adopted on a prospective basis. This Update is effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is assessing the impact of this new standard; however the adoption of the guidance in this Update is not expected to have a material impact on the Company’s Consolidated Financial Statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Significant Accounting Policies [Line Items] | |
Schedule of goodwill by segment | The carrying value of goodwill by reportable business segment at December 31, 2018 and 2017 was as follows: North South Asia (in millions) America America Pacific EMEA Total 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 Acquisitions — — — — — Currency translation — (4) (3) (5) (12) Balance at December 31, 2018 $ 600 $ 22 $ 104 $ 65 $ 791 (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, 2018 and 2017 were as follows: North South Asia ( in millions) America America Pacific EMEA Total Goodwill before impairment charges $ 601 $ 59 $ 228 $ 70 $ 958 Accumulated impairment charges (1) (33) (121) — (155) Balance at December 31, 2017 600 26 107 70 803 Goodwill before impairment charges 601 55 225 65 946 Accumulated impairment charges (1) (121) — (155) Balance at December 31, 2018 $ 600 $ 22 $ 104 $ 65 $ 791 |
Schedule of intangible assets | As of December 31, 2018 (in millions) Gross Accumulated Amortization Net Weighted Average Useful Life (years) Trademarks/tradenames (indefinite-lived) $ 178 $ — $ 178 — Customer relationships 325 (77) 248 20 Technology 103 (80) 23 9 Other 21 (10) 11 16 Total other intangible assets $ 627 $ (167) $ 460 18 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 |
Schedule of amortization expense related to intangible assets | (in millions) Year Amortization Expense 2019 $ 29 2020 27 2021 19 2022 18 2023 18 Balance thereafter 171 |
ASU 2014-09 | |
Significant Accounting Policies [Line Items] | |
Schedule of new accounting standards | 2017 2016 (in millions) As Reported As Adjusted As Reported As Adjusted Consolidated Statements of Income: Net sales before shipping and handling costs $ 6,180 $ 6,244 $ 6,022 $ 6,082 Less: shipping and handling costs 348 412 318 378 Net sales $ 5,832 $ 5,832 $ 5,704 $ 5,704 |
ASU 2017-07 | |
Significant Accounting Policies [Line Items] | |
Schedule of new accounting standards | 2017 2016 (in millions) As Reported As Adjusted As Reported As Adjusted Consolidated Statements of Income: Cost of sales $ 4,359 $ 4,360 $ 4,302 $ 4,303 Gross profit 1,473 1,472 1,402 1,401 Operating expenses 611 616 579 580 Operating income 842 836 808 806 Other, non-operating income - (6) - (2) 2017 2016 (in millions) As Reported As Adjusted As Reported As Adjusted Operating income: North America $ 661 $ 654 $ 610 $ 606 South America 80 81 89 90 Asia Pacific 112 115 111 113 EMEA 113 114 106 107 Corporate (82) (86) (86) (88) Subtotal 884 878 830 828 Total operating income $ 842 $ 836 $ 808 $ 806 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Revenue Recognition | |
Schedule of disaggregation of net sales | (in millions) 2018 2017 2016 Net sales to unaffiliated customers: North America: Net sales before shipping and handling costs $ 3,857 $ 3,843 $ 3,734 Less: shipping and handling costs 346 314 287 Net sales $ 3,511 $ 3,529 $ 3,447 South America: Net sales before shipping and handling costs $ 988 $ 1,052 $ 1,054 Less: shipping and handling costs 45 45 44 Net sales $ 943 $ 1,007 $ 1,010 Asia Pacific: Net sales before shipping and handling costs $ 837 $ 772 $ 738 Less: shipping and handling costs 34 32 29 Net sales $ 803 $ 740 $ 709 EMEA: Net sales before shipping and handling costs $ 607 $ 577 $ 556 Less: shipping and handling costs 23 21 18 Net sales $ 584 $ 556 $ 538 |
Restructuring and Impairment _2
Restructuring and Impairment Charges (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Restructuring and Impairment Charges | |
Summary of restructuring reserve | A summary of the Company’s severance accrual at December 31, 2018, is as follows (in millions): Balance in severance accrual as of December 31, 2017 $ 11 Cost Smart cost of sales and SG&A 8 Foreign exchange translation (3) Latin American Finance Transformation 2 Other 1 Payments made to terminated employees (9) Balance in severance accrual as of December 31, 2018 $ 10 |
Financial Instruments, Deriva_2
Financial Instruments, Derivatives and Hedging Activities (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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, 2018 Derivatives Designated as Hedging Instruments (in millions): Balance Sheet Location Fair Value Balance Sheet Location Fair Value Commodity and foreign currency Accounts receivable, net $ 22 Accounts payable and accrued liabilities $ 18 Commodity, foreign currency and interest rate contracts Other assets 2 Non-current liabilities 8 $ 24 $ 26 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 $ 14 $ 31 |
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, 2018 Derivatives in Cash Flow Hedging Relationships Amount of Gains Location of Gains (Losses) Reclassified from AOCI into Income Amount of Gains Commodity contracts $ 8 Cost of sales $ (6) Foreign currency contracts — Net sales/cost of sales 1 Interest rate contracts — Financing costs, net (1) Total $ 8 $ (6) 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 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 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) |
Schedule of fair value of financial instruments and derivatives | As of December 31, 2018 As of December 31, 2017 (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 $ 11 $ 11 $ — $ — $ 10 $ 10 $ — $ — Derivative assets 24 4 20 — 14 3 11 — Derivative liabilities 26 6 20 — 31 11 20 — Long-term debt 1,954 — 1,954 — 1,845 — 1,845 — (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, 2018 December 31, 2017 Carrying Fair Carrying Fair (in millions) Amount Value Amount Value 3.2% senior notes due October 1, 2026 $ 496 $ 462 $ 496 $ 492 4.625% senior notes due November 1, 2020 399 409 398 421 6.625% senior notes due April 15, 2037 254 295 254 325 5.62% senior notes due March 25, 2020 200 205 200 212 Term loan credit agreement due April 25, 2019 165 165 395 395 Revolving credit facility 418 418 — — Fair value adjustment related to hedged fixed rate debt instrument (1) — 1 — Total long-term debt $ 1,931 $ 1,954 $ 1,744 $ 1,845 |
Financing Arrangements (Tables)
Financing Arrangements (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Financing Arrangements | |
Schedule of components of long-term debt | As of As of (in millions) December 31, 2018 December 31, 2017 3.2% senior notes due October 1, 2026 $ 496 $ 496 4.625% senior notes due November 1, 2020 399 398 6.625% senior notes due April 15, 2037 254 254 5.62% senior notes due March 25, 2020 200 200 Term loan credit agreement due April 25, 2019 165 395 Revolving credit facility 418 — Fair value adjustment related to hedged fixed rate debt instruments (1) 1 Long-term debt 1,744 Short-term borrowings 120 Total debt $ $ 1,864 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Leases | |
Schedule of minimum lease payments due on leases | Year (in millions) Minimum Lease Payments 2019 $ 53 2020 44 2021 40 2022 27 2023 22 Balance thereafter 27 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Income Taxes | |
Schedule of income before income taxes and provision for income taxes | (in millions) 2018 2017 2016 Income before income taxes: U.S. $ 121 $ 226 $ 176 Foreign 500 543 566 Total income before income taxes 621 769 742 Provision for income taxes: Current tax (benefit) expense: U.S. federal 17 (13) 95 State and local 1 4 8 Foreign 172 179 148 Total current tax expense 190 170 251 Deferred tax expense (benefit): U.S. federal (14) 77 13 State and local (2) 4 1 Foreign (7) (14) (19) Total deferred tax expense (benefit) (23) 67 (5) Total provision for income taxes $ 167 $ 237 $ 246 |
Schedule of tax effects of temporary differences between financial reporting basis and tax basis of assets and liabilities | (in millions) 2018 2017 Deferred tax assets attributable to: Employee benefit accruals $ 20 $ 20 Pensions and postretirement plans 23 20 Derivative contracts 1 5 Net operating loss carryforwards 26 32 Foreign tax credit carryforwards 1 — Other — — Gross deferred tax assets 71 77 Valuation allowances (31) (34) Net deferred tax assets 40 43 Deferred tax liabilities attributable to: Property, plant and equipment 177 185 Identified intangibles 39 37 Other 3 11 Gross deferred tax liabilities 219 233 Net deferred tax liabilities $ 179 $ 190 |
Schedule of reconciliation of US federal statutory tax rate to effective tax rate | 2018 2017 2016 Provision for tax at U.S. statutory rate 21.0 % 35.0 % 35.0 % Tax rate difference on foreign income 5.3 (5.6) (5.5) State and local taxes, net — 0.7 0.3 Tax impact of fluctuations in Mexican peso to U.S. dollar — (0.5) 2.4 Net impact of U.S. foreign tax credits 0.5 0.3 (2.3) Net impact of U.S.-Canada tax settlement 0.3 (1.3) 3.2 Net impact of valuation allowance in Argentina 1.0 2.0 1.0 Net impact of transition tax 0.6 2.7 — Net impact of U.S. deferred tax remeasurement — (4.9) — Net impact of provision for taxes on unremitted earnings 0.3 4.3 0.5 Other items, net (2.1) (1.9) (1.5) Provision at effective tax rate 26.9 % 30.8 % 33.1 % |
Schedule of impact of the TCJA on 2017 income tax expense | Provisional 2017 Final 2017 (in millions) TCJA Impact TCJA Impact One-time transition tax $ 21 $ Remeasurement of deferred tax assets and liabilities (38) (38) Net impact of provision for taxes on unremitted earnings 33 Other items, net 7 Net impact of the TCJA $ 23 $ 26 |
Schedule of reconciliation of beginning and ending amount of unrecognized tax benefits, excluding interest and penalties | (in millions) 2018 2017 Balance at January 1 $ 39 $ 86 Additions for tax positions related to prior years — — Reductions for tax positions related to prior years (2) — Additions based on tax positions related to the current year — 12 Settlements — (58) Reductions related to a lapse in the statute of limitations (7) (1) Balance at December 31 $ 30 $ 39 |
Benefit Plans (Tables)
Benefit Plans (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Pension Plan | |
Pension and postretirement benefit plans | |
Schedule of funded status | U.S. Plans Non-U.S. Plans (in millions) 2018 2017 2018 2017 Benefit obligation At January 1 $ 393 $ 367 $ 248 $ 223 Service cost 6 6 3 3 Interest cost 13 13 10 11 Benefits paid (26) (23) (12) (12) Actuarial (gain) loss (27) 30 (8) 7 Curtailment/settlement/amendments (2) — — — Foreign currency translation — — (18) 16 Benefit obligation at December 31 $ 357 $ 393 $ 223 $ 248 Fair value of plan assets At January 1 $ 404 $ 368 $ 235 $ 211 Actual return on plan assets (25) 59 — 17 Employer contributions 2 — 4 5 Benefits paid (26) (23) (12) (12) Plan settlements (2) — — — Foreign currency translation — — (20) 14 Fair value of plan assets at December 31 $ 353 $ 404 $ 207 $ 235 Funded status $ (4) $ 11 $ (16) $ (13) |
Schedule of amounts recognized in the consolidated balance sheets | U.S. Plans Non-U.S. Plans (in millions) 2018 2017 2018 2017 Non-current asset $ 7 $ 23 $ 32 $ 37 Current liabilities (1) (2) (1) (1) Non-current liabilities (10) (10) (47) (49) Net asset (liability) recognized $ (4) $ 11 $ (16) $ (13) |
Schedule of amounts recognized in accumulated other comprehensive loss | U.S. Plans Non-U.S. Plans (in millions) 2018 2017 2018 2017 Net actuarial loss $ 40 $ 21 $ 57 $ 55 Transition obligation — — 1 1 Prior service credit (6) (6) (1) (1) Net amount recognized $ 34 $ 15 $ 57 $ 55 |
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) 2018 2017 2018 2017 Projected benefit obligation $ 11 $ 12 $ 49 $ 51 Accumulated benefit obligation 9 11 41 41 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) 2018 2017 2016 2018 2017 2016 Service cost $ 6 $ 6 $ 6 $ 3 $ 3 $ 3 Interest cost 13 13 14 10 11 10 Expected return on plan assets (21) (21) (20) (9) (10) (10) Amortization of actuarial loss — — 1 2 2 2 Amortization of prior service credit — (1) — — — — Settlement loss — — — — — 1 Net periodic benefit cost $ (2) $ (3) $ 1 $ 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 2018 2017 2016 2018 2017 2016 Net actuarial loss (gain) $ 19 $ (7) $ 10 $ 4 $ (3) $ 6 Prior service credit — — (6) — — (1) Amortization of actuarial loss — — (1) (2) (2) (2) Amortization of prior service credit — 1 — — — — Total recorded in other comprehensive income 19 (6) 3 2 (5) 3 Net periodic benefit cost (2) (3) 1 6 6 6 Total recorded in other comprehensive income and net periodic benefit cost $ 17 $ (9) $ 4 $ 8 $ 1 $ 9 |
Schedule of weighted average assumptions used to determine the company's obligations | U.S. Plans Non-U.S. Plans 2018 2017 2018 2017 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 2018 2017 2016 2018 2017 2016 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 2018 2017 2018 2017 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, 2018 (in millions) Level 1 Level 2 Level 3 Total U.S. Plans: Equity index: U.S. ( a ) $ — $ 33 $ — $ 33 International ( b ) — 35 — 35 Fixed income index: Long bond ( c ) — 258 — 258 Long government bond ( d ) — 24 — 24 Cash ( e ) — 3 — 3 Total U.S. Plans $ — $ 353 $ — $ 353 Non-U.S. Plans: Equity index: U.S. ( a ) $ — $ 3 $ — $ 3 Canada ( f ) — 13 — 13 International ( b ) — 15 — 15 Real estate ( g ) — 2 — 2 Fixed income index: Intermediate bond (h) — 34 — 34 Long bond ( i ) — 99 — 99 Other (j) — 24 — 24 Cash ( e ) 2 15 — 17 Total Non-U.S. Plans $ 2 $ 205 $ — $ 207 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 govt 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 (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 2019 $ 19 $ 11 2020 20 11 2021 22 11 2022 22 12 2023 24 13 Years 2024 - 2028 123 66 |
Postemployment Retirement Benefits | |
Pension and postretirement benefit plans | |
Schedule of funded status | (in millions) 2018 2017 Accumulated postretirement benefit obligation At January 1 $ 70 $ 67 Service cost 1 1 Interest cost 3 3 Employee contributions — 1 Plan curtailments (1) — Actuarial (gain) loss (2) 2 Benefits paid (4) (4) Foreign currency translation (3) — At December 31 64 70 Fair value of plan assets — — Funded status $ (64) $ (70) |
Schedule of amounts recognized in the consolidated balance sheets | (in millions) 2018 2017 Current liabilities $ (4) $ (4) Non-current liabilities (60) (66) Net liability recognized $ (64) $ (70) |
Schedule of amounts recognized in accumulated other comprehensive loss | (in millions) 2018 2017 Net actuarial loss $ 8 $ 11 Prior service credit Net amount recognized $ 4 $ 5 |
Components of net periodic benefit cost | Year Ended December 31, (in millions) 2018 2017 2016 Service cost $ 1 $ 1 $ 1 Interest cost 3 3 2 Amortization of prior service credit (2) (3) (2) Net periodic benefit cost $ 2 $ 1 $ 1 |
Schedule of amounts recorded in other comprehensive income and net periodic benefit cost | (in millions, pre-tax) 2018 2017 2016 Net actuarial loss (gain) $ (3) $ 2 $ 2 Amortization of prior service credit 2 3 2 New prior service credit — — — Total recorded in other comprehensive income (1) 5 4 Net periodic benefit cost 2 1 1 Total recorded in other comprehensive income and net periodic benefit cost $ 1 $ 6 $ 5 |
Schedule of weighted average assumptions used to determine the company's obligations | 2018 2017 Discount rate % % |
Schedule of weighted average assumptions used to determine the company's net periodic benefit cost | 2018 2017 2016 Discount rate % % % |
Schedule of assumptions made in measuring the company's postretirement benefit obligation | U.S. Canada Brazil 2018 increase in per capita cost % % % Ultimate trend % % % Year ultimate trend reached |
Sensitivity to Trend Assumptions | (in millions) 2018 One-percentage point increase in trend rates: - Increase in service cost and interest cost components $ 1 - Increase in year-end benefit obligations 5 One-percentage point decrease in trend rates: - Decrease in service cost and interest cost components 1 - Decrease in year-end benefit obligations 7 |
Schedule of benefit payments, which reflect anticipated future service, as appropriate and are expected to be made | (in millions) 2019 $ 4 2020 4 2021 4 2022 5 2023 5 Years 2024 - 2028 23 |
Supplementary Information (Tabl
Supplementary Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Supplementary Information | |
Balance Sheets - supplementary information | (in millions) 2018 2017 Accounts receivable, net: Accounts receivable — trade $ 802 $ 760 Accounts receivable — other 157 209 Allowance for doubtful accounts (8) (8) Total accounts receivable, net $ 951 $ 961 Inventories: Finished and in process $ 522 $ 495 Raw materials 250 278 Manufacturing supplies 52 50 Total inventories $ 824 $ 823 Accrued liabilities: Compensation-related costs $ 81 $ 101 Income taxes payable 27 22 Unrecognized tax benefits — — Dividends payable 42 44 Accrued interest 15 15 Taxes payable other than income taxes 33 37 Other 127 125 Total accrued liabilities $ 325 $ 344 Non-current liabilities: Employees’ pension, indemnity, and postretirement 122 121 Other 95 106 Total non-current liabilities $ 217 $ 227 |
Statements of Income - supplementary information | (in millions) 2018 2017 2016 Other income, net: Insurance settlement $ — $ 9 $ — Value-added tax recovery 5 6 5 Other 5 3 (1) Other income, net $ 10 $ $ (in millions) 2018 2017 2016 Financing costs, net: Interest expense, net of amounts capitalized (a) $ 81 $ 79 $ 73 Interest income (9) (11) (10) Foreign currency transaction losses 14 5 3 Financing costs, net $ 86 $ 73 $ 66 (a) Interest capitalized amounted to $3 million, $4 million, and $4 million in 2018, 2017 and 2016, respectively. |
Statements of Cash Flow - supplementary information | (in millions) 2018 2017 2016 Other non-cash charges to net income: Share-based compensation expense $ 21 $ 26 $ 28 Other 18 13 16 Total other non-cash charges to net income $ 39 $ 39 $ 44 (in millions) 2018 2017 2016 Interest paid $ 73 $ 77 $ 59 Income taxes paid 231 289 254 |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Equity | |
Schedule of reconciliation of common stock share activity | (Shares of common stock, in thousands) Issued Held in Treasury Outstanding 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 Issuance of restricted stock units as compensation — (100) 100 Performance shares and other share-based awards — (68) 68 Stock options exercised — (209) 209 Purchase/acquisition of treasury stock — 5,847 (5,847) Balance at December 31, 2018 77,811 11,285 66,526 |
Schedule of stock based compensation expense | (in millions) 2018 2017 2016 Stock options: Pre-tax compensation expense $ 5 $ 7 $ 9 Income tax benefit (1) (2) (3) Stock option expense, net of income taxes 4 5 6 RSUs: Pre-tax compensation expense 12 13 12 Income tax benefit (2) (4) (5) RSUs, net of income taxes 10 9 7 Performance shares and other share-based awards: Pre-tax compensation expense 4 6 7 Income tax benefit — (2) (3) Performance shares and other share-based compensation expense, net of income taxes 4 4 4 Total share-based compensation: Pre-tax compensation expense 21 26 28 Income tax benefit (3) (8) (11) Total share-based compensation expense, net of income taxes $ 18 $ 18 $ 17 |
Schedule of valuation assumptions for stock options | For the Year Ended December 31, 2018 2017 2016 Expected life (in years) 5.5 5.5 5.5 Risk-free interest rate % % % Expected volatility % % % Expected dividend yield % % % |
Schedule of stock option transactions | Number of Options (in thousands) Weighted Average Exercise Price per Share Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in millions) Outstanding as of December 31, 2017 2,095 $ 71.81 5.87 $ 142 Granted 215 133.61 Exercised (209) 48.50 Cancelled (22) 99.81 Outstanding as of December 31, 2018 2,079 $ 80.25 5.51 $ 42 Exercisable as of December 31, 2018 1,599 $ 67.85 4.68 $ 42 |
Schedule of additional information pertaining to stock option activity | Year Ended December 31, (dollars in millions, except per share) 2018 2017 2016 Weighted average grant date fair value of stock options granted (per share) $ 24.01 $ 23.90 $ 18.73 Total intrinsic value of stock options exercised 15 35 46 |
Schedule of restricted unit activity | Weighted Number of Average Restricted Fair Value (shares in thousands) Shares per Share Non-vested at December 31, 2017 387 $ Granted 114 Vested (137) Cancelled (20) Non-vested at December 31, 2018 344 $ |
Summary of net changes in accumulated other comprehensive loss | (in millions) Cumulative Translation Adjustment Deferred (Loss) Gain on Hedging Activities Pension and Postretirement Adjustment Unrealized (Loss) Gain on Investment Accumulated Other Comprehensive Loss 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) Other comprehensive (loss) income before reclassification adjustments (129) 8 (20) — (141) Amount reclassified from accumulated OCI — 6 — — 6 Tax (provision) benefit — (4) 5 — 1 Net other comprehensive (loss) income (129) 10 (15) — (134) Adoption of ASU 2016-01* — — — (2) (2) Adoption of ASU 2018-02* — (2) (3) — (5) Other — (2) (3) (2) (7) Balance, December 31, 2018 $ (1,080) $ (5) $ (69) $ — $ (1,154) |
Schedule of reclassifications from AOCI into net income | Affected Line Item in Amount Reclassified from AOCI Consolidated (in millions) 2018 2017 2016 Statements of Income (Losses) gains on cash flow hedges: Commodity contracts $ (6) $ (5) $ (45) Cost of sales Foreign currency contracts 1 1 (2) Net sales/Cost of sales Interest rate contracts (1) (2) (2) Financing costs, net Gains related to pension and other postretirement obligations - 2 (1) (a) Total before-tax reclassifications (6) (4) (50) Tax benefit 2 1 16 Total after-tax reclassifications $ (4) $ (3) $ (34) (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 | 2018 2017 2016 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 $ 443 70.9 $ 6.25 $ 519 72.0 $ 7.21 $ 485 72.3 $ 6.70 Effect of Dilutive Securities: Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards 0.9 1.5 1.8 Diluted EPS $ 443 71.8 $ 6.17 $ 519 73.5 $ 7.06 $ 485 74.1 $ 6.55 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
Segment Information | |
Schedule of segment reporting of net sales, operating income and total assets | (in millions) 2018 2017 2016 Net sales to unaffiliated customers: North America: Net sales before shipping and handling costs $ 3,857 $ 3,843 $ 3,734 Less: shipping and handling costs 346 314 287 Net sales $ 3,511 $ 3,529 $ 3,447 South America: Net sales before shipping and handling costs $ 988 $ 1,052 $ 1,054 Less: shipping and handling costs 45 45 44 Net sales $ 943 $ 1,007 $ 1,010 Asia Pacific: Net sales before shipping and handling costs $ 837 $ 772 $ 738 Less: shipping and handling costs 34 32 29 Net sales $ 803 $ 740 $ 709 EMEA: Net sales before shipping and handling costs $ 607 $ 577 $ 556 Less: shipping and handling costs 23 21 18 Net sales $ 584 $ 556 $ 538 (in millions) Operating income: 2018 2017 2016 North America $ 545 $ 654 $ 606 South America 99 81 90 Asia Pacific 104 115 113 EMEA 116 114 107 Corporate (97) (86) (88) Subtotal 767 878 828 Restructuring/impairment charges (a) (64) (38) (19) Acquisition/integration costs — (4) (3) Charge for fair value markup of acquired inventory — (9) — Insurance settlement — 9 — Total operating income 703 836 806 Financing costs, net 86 73 66 Other, non-operating income (4) (6) (2) Income before income taxes $ 621 $ 769 $ 742 (a) For 2018, includes $49 million of restructuring expenses as part of the Cost Smart cost of sales program in relation to the cessation of wet-milling at the Stockton, California plant, $11 million of restructuring costs related to Cost Smart SG&A program, $3 million of costs related to the North America finance transformation program, and $1 million of costs related to the leaf extraction process in Brazil. 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 the 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 the optimization initiative in North America and South America, and $2 million of costs attributable to the Port Colborne plant sale. For 2018, includes $49 million of restructuring expenses as part of the Cost Smart cost of sales program in relation to the cessation of wet-milling at the Stockton, California plant, $11 million of restructuring costs related to Cost Smart SG&A program, $3 million of costs related to the North America finance transformation program, and $1 million of costs related to the leaf extraction process in Brazil. 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 the 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 the optimization initiative in North America and South America, and $2 million of costs attributable to the Port Colborne plant sale.vFor 2018, includes $49 million of restructuring expenses as part of the Cost Smart cost of sales program in relation to the cessation of wet-milling at the Stockton, California plant, $11 million of restructuring costs related to Cost Smart SG&A program, $3 million of costs related to the North America finance transformation program, and $1 million of costs related to the leaf extraction process in Brazil. 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 the 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 the optimization initiative in North America and South America, and $2 million of costs attributable to the Port Colborne plant sale.For 2018, includes $49 million of restructuring expenses as part of the Cost Smart cost of sales program in relation to the cessation of wet-milling at the Stockton, California plant, $11 million of restructuring costs related to Cost Smart SG&A program, $3 million of costs related to the North America finance transformation program, and $1 million of costs related to the leaf extraction process in Brazil. 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 the 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 the optimization initiative in North America and South America, and $2 million of costs attributable to the Port Colborne plant sale. As of December 31, (in millions) 2018 2017 Total assets: North America (a) $ 3,737 $ 3,967 South America 711 812 Asia Pacific 792 774 EMEA 488 527 Total $ 5,728 $ 6,080 (a) For purposes of presentation, North America includes Corporate assets. (in millions) 2018 2017 2016 Depreciation and amortization: North America (a) $ 180 $ 140 $ 130 South America 24 27 26 Asia Pacific 27 25 23 EMEA 16 17 17 Total $ 247 $ 209 $ 196 Mechanical stores expense (b) : North America (a) $ 38 $ 37 $ 37 South America 11 12 12 Asia Pacific 5 5 5 EMEA 3 3 3 Total $ 57 $ 57 $ 57 Capital expenditures and mechanical stores purchases: North America (a) $ 232 $ 180 $ 167 South America 61 50 56 Asia Pacific 39 51 41 EMEA 18 33 20 Total $ 350 $ 314 $ 284 (a) For purposes of presentation, North America includes Corporate activities of depreciation, amortization, capital expenditures, and mechanical stores purchase, respectively. (b) 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) 2018 2017 2016 U.S. $ 2,133 $ 2,191 $ 2,117 Mexico 997 952 955 Brazil 462 519 522 Canada 381 385 375 Korea 286 275 266 Others 1,582 1,510 1,469 Total $ 5,841 $ 5,832 $ 5,704 |
Schedule of long-lived assets (excluding intangible assets) by country | Long-lived Assets (in millions) 2018 2017 U.S. $ 1,004 $ 977 Mexico 318 306 Brazil 207 235 Canada 165 179 Thailand 137 137 Germany 129 133 Korea 110 109 Others 259 284 Total $ 2,329 $ 2,360 |
Quarterly Financial Data (Una_2
Quarterly Financial Data (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2018 | |
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) 2018 Net sales before shipping and handling costs $ 1,581 $ 1,608 $ 1,563 $ 1,537 Less: shipping and handling costs 112 112 113 111 Net sales 1,469 1,496 1,450 1,426 Gross profit 354 360 334 320 Net income attributable to Ingredion 140 114 95 Basic earnings per common share of Ingredion 1.94 1.59 1.33 1.38 Diluted earnings per common share of Ingredion 1.90 1.57 1.32 1.36 Per share dividends declared $ 0.60 $ 0.60 $ 0.625 $ 0.625 (in millions, except per share amounts) 1 st QTR (e) 2 nd QTR (f) 3 rd QTR (g) 4 th QTR (h) 2017 Net sales before shipping and handling costs $ 1,552 $ 1,558 $ 1,591 $ 1,543 Less: shipping and handling costs 99 101 106 106 Net sales 1,453 1,457 1,485 1,437 Gross profit 351 373 388 360 Net income attributable to Ingredion 124 130 166 99 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 (a) In the first quarter of 2018, the Company recorded $3 million in after-tax, net restructuring costs. (b) In the second quarter of 2018, the Company recorded $5 million in after-tax, net restructuring costs and $2 million in after-tax, interest penalty related to an income tax settlement. (c) In the third quarter of 2018, the Company recorded a $27 million in after-tax, net restructuring costs, $2 million in after-tax charges for the refinement of provisional charges related to the enactment of the TCJA, and $2 million after-tax gain related to a refinement of reserve for an income tax settlement. (d) In the fourth quarter of 2018, the Company recorded a $16 million in after-tax, net restructuring costs and $1 million in after-tax charges for the refinement of provisional charges related to the enactment of the TCJA. (e) 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. (f) 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. (g) 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. (h) 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 $1 million in after-tax acquisition and integration costs. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Basis of presentation (Details) | Jun. 30, 2018 |
Argentina | Minimum | |
Currency | |
Three-year cumulative inflation rate as a percent | 100.00% |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Transaction and translation losses (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Foreign currency transaction and translation | |||
Foreign currency transaction losses | $ 14 | $ 5 | $ 3 |
Cumulative translation loss adjustments | $ 1,100 | $ 1,000 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Investments (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Investments | ||
Cost method investments | $ 2 | $ 2 |
Verdient Foods, Inc. | ||
Investments | ||
Equity method investments | $ 15 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Property, plant and equipment and depreciation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Property, plant and equipment and depreciation | |||
Depreciation expense | $ 217 | $ 179 | $ 171 |
Building | Minimum | |||
Property, plant and equipment and depreciation | |||
Useful life | 25 years | ||
Building | Maximum | |||
Property, plant and equipment and depreciation | |||
Useful life | 50 years | ||
Other Capitalized Property Plant and Equipment | Minimum | |||
Property, plant and equipment and depreciation | |||
Useful life | 2 years | ||
Other Capitalized Property Plant and Equipment | Maximum | |||
Property, plant and equipment and depreciation | |||
Useful life | 25 years |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Goodwill and intangible assets (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Goodwill and intangible assets | |||
Goodwill | $ 791 | $ 803 | $ 784 |
Other intangible assets, net | $ 460 | $ 493 |
Summary of Significant Accoun_9
Summary of Significant Accounting Standards and Policies - Goodwill (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Carrying value of goodwill | ||
Balance at the beginning of the period | $ 803 | $ 784 |
Acquisitions | 5 | |
Currency translation | (12) | 14 |
Balance at the end of the period | 791 | 803 |
North America | ||
Carrying value of goodwill | ||
Balance at the beginning of the period | 600 | 610 |
Acquisitions | (10) | |
Balance at the end of the period | 600 | 600 |
South America | ||
Carrying value of goodwill | ||
Balance at the beginning of the period | 26 | 26 |
Currency translation | (4) | |
Balance at the end of the period | 22 | 26 |
Asia Pacific | ||
Carrying value of goodwill | ||
Balance at the beginning of the period | 107 | 85 |
Acquisitions | 15 | |
Currency translation | (3) | 7 |
Balance at the end of the period | 104 | 107 |
EMEA | ||
Carrying value of goodwill | ||
Balance at the beginning of the period | 70 | 63 |
Currency translation | (5) | 7 |
Balance at the end of the period | $ 65 | $ 70 |
Summary of Significant Accou_10
Summary of Significant Accounting Standards and Policies - Goodwill impairment (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Carrying value of goodwill and accumulated impairment charges | |||
Goodwill before impairment charges | $ 946 | $ 958 | |
Accumulated impairment charges | (155) | (155) | |
Goodwill net of accumulated impairment charges | 791 | 803 | $ 784 |
North America | |||
Carrying value of goodwill and accumulated impairment charges | |||
Goodwill before impairment charges | 601 | 601 | |
Accumulated impairment charges | (1) | (1) | |
Goodwill net of accumulated impairment charges | 600 | 600 | 610 |
South America | |||
Carrying value of goodwill and accumulated impairment charges | |||
Goodwill before impairment charges | 55 | 59 | |
Accumulated impairment charges | (33) | (33) | |
Goodwill net of accumulated impairment charges | 22 | 26 | 26 |
Asia Pacific | |||
Carrying value of goodwill and accumulated impairment charges | |||
Goodwill before impairment charges | 225 | 228 | |
Accumulated impairment charges | (121) | (121) | |
Goodwill net of accumulated impairment charges | 104 | 107 | 85 |
EMEA | |||
Carrying value of goodwill and accumulated impairment charges | |||
Goodwill before impairment charges | 65 | 70 | |
Goodwill net of accumulated impairment charges | $ 65 | $ 70 | $ 63 |
Summary of Significant Accou_11
Summary of Significant Accounting Standards - Intangible assets (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Gross | ||
Total other intangible assets, Gross | $ 627 | $ 632 |
Accumulated Amortization | (167) | (139) |
Net | ||
Total other intangible assets, Net | $ 460 | $ 493 |
Weighted Average Useful Life (years) | 18 years | 18 years |
Customer relationships | ||
Gross | ||
Finite-lived intangible assets, Gross | $ 325 | $ 329 |
Accumulated Amortization | (77) | (62) |
Net | ||
Finite-Lived Intangible Assets, Net, Total | $ 248 | $ 267 |
Weighted Average Useful Life (years) | 20 years | 20 years |
Technology | ||
Gross | ||
Finite-lived intangible assets, Gross | $ 103 | $ 103 |
Accumulated Amortization | (80) | (68) |
Net | ||
Finite-Lived Intangible Assets, Net, Total | $ 23 | $ 35 |
Weighted Average Useful Life (years) | 9 years | 9 years |
Other intangible asset | ||
Gross | ||
Finite-lived intangible assets, Gross | $ 21 | $ 22 |
Accumulated Amortization | (10) | (9) |
Net | ||
Finite-Lived Intangible Assets, Net, Total | $ 11 | $ 13 |
Weighted Average Useful Life (years) | 16 years | 16 years |
Trademarks/tradenames | ||
Gross | ||
Indefinite-lived intangible assets | $ 178 | $ 178 |
Net | ||
Indefinite-lived intangible assets, Net | $ 178 | $ 178 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Amortization (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Summary of Significant Accounting Standards and Policies | |||
Amortization expense | $ 30 | $ 30 | $ 25 |
Expected intangible amortization expense for subsequent years | |||
2,019 | 29 | ||
2,020 | 27 | ||
2,021 | 19 | ||
2,022 | 18 | ||
2,023 | 18 | ||
Balance thereafter | $ 171 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Hedging instruments (Details) | 12 Months Ended |
Dec. 31, 2018 | |
Hedging instruments | |
Maximum term over which the company hedges exposures to the variability of cash flows for commodity price risk | 24 months |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Earnings per common share (Details) - shares shares in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Earnings per common share | |||
Weighted average number of shares outstanding, basic | 70.9 | 72 | 72.3 |
Weighted average number of shares outstanding, diluted | 71.8 | 73.5 | 74.1 |
Antidilutive securities excluded from computation of earnings per share amount | 0.5 | 0.3 | 0 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - ASU 2014-09 (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Recently Adopted Accounting Standards | |||||||||||
Net sales before shipping and handling costs | $ 1,537 | $ 1,563 | $ 1,608 | $ 1,581 | $ 1,543 | $ 1,591 | $ 1,558 | $ 1,552 | $ 6,289 | $ 6,244 | $ 6,082 |
Less: Shipping and handling costs | 111 | 113 | 112 | 112 | 106 | 106 | 101 | 99 | 448 | 412 | 378 |
Net sales | $ 1,426 | $ 1,450 | $ 1,496 | $ 1,469 | $ 1,437 | $ 1,485 | $ 1,457 | $ 1,453 | $ 5,841 | 5,832 | 5,704 |
ASU 2014-09 | As Reported, Before 606 | |||||||||||
Recently Adopted Accounting Standards | |||||||||||
Net sales before shipping and handling costs | 6,180 | 6,022 | |||||||||
Less: Shipping and handling costs | 348 | 318 | |||||||||
Net sales | $ 5,832 | $ 5,704 |
Summary of Significant Accou_16
Summary of Significant Accounting Policies - ASU 2017-07 (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Recently Adopted Accounting Standards | |||||||||||
Cost of sales | $ 4,473 | $ 4,360 | $ 4,303 | ||||||||
Gross profit | $ 320 | $ 334 | $ 360 | $ 354 | $ 360 | $ 388 | $ 373 | $ 351 | 1,368 | 1,472 | 1,401 |
Operating expenses | 611 | 616 | 580 | ||||||||
Operating income | 703 | 836 | 806 | ||||||||
Other, non-operating income | (4) | (6) | (2) | ||||||||
Operating income Subtotal | 767 | 878 | 828 | ||||||||
ASU 2017-07 | As Reported | |||||||||||
Recently Adopted Accounting Standards | |||||||||||
Cost of sales | 4,359 | 4,302 | |||||||||
Gross profit | 1,473 | 1,402 | |||||||||
Operating expenses | 611 | 579 | |||||||||
Operating income | 842 | 808 | |||||||||
Operating income Subtotal | 884 | 830 | |||||||||
Operating Segments | North America | |||||||||||
Recently Adopted Accounting Standards | |||||||||||
Operating income Subtotal | 545 | 654 | 606 | ||||||||
Operating Segments | North America | ASU 2017-07 | As Reported | |||||||||||
Recently Adopted Accounting Standards | |||||||||||
Operating income Subtotal | 661 | 610 | |||||||||
Operating Segments | South America | |||||||||||
Recently Adopted Accounting Standards | |||||||||||
Operating income Subtotal | 99 | 81 | 90 | ||||||||
Operating Segments | South America | ASU 2017-07 | As Reported | |||||||||||
Recently Adopted Accounting Standards | |||||||||||
Operating income Subtotal | 80 | 89 | |||||||||
Operating Segments | Asia Pacific | |||||||||||
Recently Adopted Accounting Standards | |||||||||||
Operating income Subtotal | 104 | 115 | 113 | ||||||||
Operating Segments | Asia Pacific | ASU 2017-07 | As Reported | |||||||||||
Recently Adopted Accounting Standards | |||||||||||
Operating income Subtotal | 112 | 111 | |||||||||
Operating Segments | EMEA | |||||||||||
Recently Adopted Accounting Standards | |||||||||||
Operating income Subtotal | 116 | 114 | 107 | ||||||||
Operating Segments | EMEA | ASU 2017-07 | As Reported | |||||||||||
Recently Adopted Accounting Standards | |||||||||||
Operating income Subtotal | 113 | 106 | |||||||||
Corporate, Non -Segment | |||||||||||
Recently Adopted Accounting Standards | |||||||||||
Operating income Subtotal | $ (97) | (86) | (88) | ||||||||
Corporate, Non -Segment | ASU 2017-07 | As Reported | |||||||||||
Recently Adopted Accounting Standards | |||||||||||
Operating income Subtotal | $ (82) | $ (86) |
Summary of Significant Accou_17
Summary of Significant Accounting Policies - Highly Inflationary Accounting (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Jun. 30, 2018 | |
Foreign currency matters | ||
Charge related to the remeasurement | $ 2 | |
Minimum | ||
Foreign currency matters | ||
Cumulative three-year inflation rate (as a percent) | 100.00% | |
Sales revenue, net | Geographic concentration risk | Argentina | ||
Foreign currency matters | ||
Concentration risk (as a percent) | 3.00% |
Summary of Significant Accou_18
Summary of Significant Accounting Policies - Other (Details) - USD ($) $ in Millions | Jan. 01, 2018 | Sep. 30, 2018 |
ASU 2016-01 | Accumulated Other Comprehensive Loss | ||
Recently Adopted Accounting Standards | ||
Adoption of ASU 2016-01 | $ (2) | |
ASU 2016-01 | Retained Earnings | ||
Recently Adopted Accounting Standards | ||
Adoption of ASU 2016-01 | $ 2 | |
ASU 2018-02 | Accumulated Other Comprehensive Loss | ||
Recently Adopted Accounting Standards | ||
Adoption of ASU 2018-02 | $ (5) | |
ASU 2018-02 | Retained Earnings | ||
Recently Adopted Accounting Standards | ||
Adoption of ASU 2018-02 | $ 5 |
Acquisitions - Sun Flour (Detai
Acquisitions - Sun Flour (Details) - USD ($) $ in Millions | Mar. 09, 2017 | Dec. 31, 2017 | Sep. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Acquisitions | |||||||
Goodwill | $ 803 | $ 791 | $ 803 | $ 784 | |||
Increase in pre-tax cost of sales for fair value mark-up of acquired inventory | 9 | ||||||
Pre-tax acquisition and integration costs | 1 | $ 1 | $ 1 | 4 | 3 | ||
Sun Flour | |||||||
Acquisitions | |||||||
Total purchase consideration | $ 18 | ||||||
Cash consideration | 16 | ||||||
Liabilities assumed | 2 | ||||||
Goodwill and identifiable intangible assets | 15 | ||||||
Tangible assets, net | 3 | ||||||
Asia Pacific | |||||||
Acquisitions | |||||||
Goodwill | $ 107 | $ 104 | $ 107 | $ 85 | |||
Asia Pacific | Sun Flour | |||||||
Acquisitions | |||||||
Goodwill | $ 14 |
Revenue Recognition (Details)
Revenue Recognition (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)segment | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Disaggregation of revenue | |||||||||||
Revenue, practical expedient, incremental cost of obtaining contract | true | ||||||||||
Number of reportable units | segment | 4 | ||||||||||
Net sales before shipping and handling costs | $ 1,537 | $ 1,563 | $ 1,608 | $ 1,581 | $ 1,543 | $ 1,591 | $ 1,558 | $ 1,552 | $ 6,289 | $ 6,244 | $ 6,082 |
Less: Shipping and handling costs | 111 | 113 | 112 | 112 | 106 | 106 | 101 | 99 | 448 | 412 | 378 |
Net sales | $ 1,426 | $ 1,450 | $ 1,496 | $ 1,469 | $ 1,437 | $ 1,485 | $ 1,457 | $ 1,453 | 5,841 | 5,832 | 5,704 |
North America | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales before shipping and handling costs | 3,857 | 3,843 | 3,734 | ||||||||
Less: Shipping and handling costs | 346 | 314 | 287 | ||||||||
Net sales | 3,511 | 3,529 | 3,447 | ||||||||
South America | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales before shipping and handling costs | 988 | 1,052 | 1,054 | ||||||||
Less: Shipping and handling costs | 45 | 45 | 44 | ||||||||
Net sales | 943 | 1,007 | 1,010 | ||||||||
Asia Pacific | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales before shipping and handling costs | 837 | 772 | 738 | ||||||||
Less: Shipping and handling costs | 34 | 32 | 29 | ||||||||
Net sales | 803 | 740 | 709 | ||||||||
EMEA | |||||||||||
Disaggregation of revenue | |||||||||||
Net sales before shipping and handling costs | 607 | 577 | 556 | ||||||||
Less: Shipping and handling costs | 23 | 21 | 18 | ||||||||
Net sales | $ 584 | $ 556 | $ 538 |
Restructuring and Impairment _3
Restructuring and Impairment Charges - Charges (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Restructuring and impairment charges | ||||||||||||
Restructuring charges | $ 16 | $ 27 | $ 5 | $ 3 | $ 10 | $ 5 | $ 5 | $ 11 | $ 64 | $ 38 | ||
Cost Smart Cost of Sales Program | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 49 | |||||||||||
Cost Smart Cost of Sales Program | Forecast | Maximum | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | $ 3 | |||||||||||
Cost Smart Cost of Sales Program | Accelerated depreciation | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 34 | |||||||||||
Cost Smart Cost of Sales Program | Mechanical stores | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 8 | |||||||||||
Cost Smart Cost of Sales Program | Employee-related severance costs | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 3 | |||||||||||
Cost Smart Cost of Sales Program | Other restructuring costs | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 4 | |||||||||||
Latin American Finance Transformation Initiative | Forecast | Minimum | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 1 | |||||||||||
Latin American Finance Transformation Initiative | Forecast | Maximum | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | $ 2 | |||||||||||
Latin American Finance Transformation Initiative | Employee-related severance costs | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 2 | |||||||||||
Latin American Finance Transformation Initiative | Employee-related severance and other costs | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 4 | |||||||||||
Cost Smart SG&A Program | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 11 | |||||||||||
Cost Smart SG&A Program | South America, APAC and North America segments | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 7 | |||||||||||
Cost Smart SG&A Program | Employee-related severance costs | South America, APAC and North America segments | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 6 | |||||||||||
Cost Smart SG&A Program | Consulting fees | South America, APAC and North America segments | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 1 | |||||||||||
North America Finance Transformation Initiative | Other restructuring costs | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 3 | |||||||||||
Brazil leaf extraction Process restructuring | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 1 | 13 | ||||||||||
Brazil leaf extraction Process restructuring | Other restructuring costs | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | $ 1 | |||||||||||
Argentina organizational restructuring effort | Employee-related severance and other costs | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 17 | |||||||||||
Optimization Initiative Of North And South America | Employee-related severance costs | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | $ 6 | |||||||||||
Optimization Initiative Of North And South America | Employee-related severance and other costs | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | 6 | |||||||||||
North America restructuring plans and prior year restructuring activities | Employee-related severance, other costs and adjustments | ||||||||||||
Restructuring and impairment charges | ||||||||||||
Restructuring charges | $ 2 |
Restructuring and Impairment _4
Restructuring and Impairment Charges - Employee-related severance (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Restructuring accrual | |||||||||||
Restructuring charges | $ 16 | $ 27 | $ 5 | $ 3 | $ 10 | $ 5 | $ 5 | $ 11 | $ 64 | $ 38 | |
Goodwill impairment | 0 | 0 | $ 0 | ||||||||
Indefinite-lived intangible assets impairment | 0 | 0 | $ 0 | ||||||||
Employee-related severance costs | |||||||||||
Restructuring accrual | |||||||||||
Balance in severance accrual at beginning of period | $ 11 | 11 | |||||||||
Foreign exchange translation | (3) | ||||||||||
Other | 1 | ||||||||||
Payments made to terminated employees | (9) | ||||||||||
Balance in severance accrual at end of period | 10 | $ 11 | 10 | $ 11 | |||||||
Restructuring reserve, Expected to be paid in next 12 months | $ 9 | 9 | |||||||||
Cost Smart Cost of Sales and SG&A Program | Employee-related severance costs | |||||||||||
Restructuring accrual | |||||||||||
Restructuring charges | 8 | ||||||||||
Latin American Finance Transformation Initiative | Employee-related severance costs | |||||||||||
Restructuring accrual | |||||||||||
Restructuring charges | $ 2 |
Financial Instruments, Deriva_3
Financial Instruments, Derivatives and Hedging Activities - Commodity price hedging (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Financial instruments, derivatives and hedging activities | ||
Accumulated gains (losses) from derivative instruments, net of tax effect | $ (1,154) | $ (1,013) |
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 | |
Cash Flow Hedging | Commodity Contracts | ||
Financial instruments, derivatives and hedging activities | ||
Accumulated gains (losses) from derivative instruments, net of tax effect | $ (2) | (12) |
Tax effect on gain (loss) on derivative instruments | $ (2) | $ (7) |
Financial Instruments, Deriva_4
Financial Instruments, Derivatives and Hedging Activities - Interest rate hedging (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Financial instruments, derivatives and hedging activities | ||
Accumulated gains (losses) from derivative instruments, net of tax effect | $ (1,154) | $ (1,013) |
4.625% senior notes due November 1, 2020 | ||
Financial instruments, derivatives and hedging activities | ||
Debt, face amount | 400 | |
Treasury Lock | ||
Financial instruments, derivatives and hedging activities | ||
Derivative notional amount | 0 | 0 |
Cash Flow Hedging | Treasury Lock | ||
Financial instruments, derivatives and hedging activities | ||
Accumulated gains (losses) from derivative instruments, net of tax effect | (2) | (2) |
Tax effect on gain (loss) on derivative instruments | (1) | (1) |
Fair Value Hedging | Interest Rate Swap | ||
Financial instruments, derivatives and hedging activities | ||
Fair value of derivative instruments | (1) | $ 1 |
Fair Value Hedging | Interest Rate Swap | 4.625% senior notes due November 1, 2020 | ||
Financial instruments, derivatives and hedging activities | ||
Debt, face amount | $ 200 | |
Debt, fixed interest rate (as a percent) | 4.625% | |
Debt, floating rate of interest basis | six-month U.S. LIBOR |
Financial Instruments, Deriva_5
Financial Instruments, Derivatives and Hedging Activities - Foreign currency hedging (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Financial instruments, derivatives and hedging activities | ||
Accumulated gains (losses) from derivative instruments, net of tax effect | $ (1,154) | $ (1,013) |
Cash Flow Hedging | Foreign Exchange Forward | ||
Financial instruments, derivatives and hedging activities | ||
Accumulated gains (losses) from derivative instruments, net of tax effect | 1 | |
Tax effect on gain (loss) on derivative instruments | 1 | |
Fair Value Hedging | Foreign Exchange Forward | ||
Financial instruments, derivatives and hedging activities | ||
Fair value of derivative instruments | 5 | 11 |
Fair Value Hedging | Foreign Exchange Forward | Short | ||
Financial instruments, derivatives and hedging activities | ||
Derivative notional amount | 621 | 447 |
Fair Value Hedging | Foreign Exchange Forward | Long | ||
Financial instruments, derivatives and hedging activities | ||
Derivative notional amount | $ 165 | $ 121 |
Financial Instruments, Deriva_6
Financial Instruments, Derivatives and Hedging Activities - Balance Sheet Location (Details) - Designated as Hedging Instrument - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Fair value of commodity contracts | ||
Fair value of derivative instruments, Assets | $ 24 | $ 14 |
Fair value of derivative instruments, Liabilities | 26 | 31 |
Commodity and foreign currency contracts | Accounts Receivable, Net | ||
Fair value of commodity contracts | ||
Fair value of derivative instruments, Assets | 22 | 11 |
Commodity and foreign currency contracts | Accounts Payable and Accrued Liabilities | ||
Fair value of commodity contracts | ||
Fair value of derivative instruments, Liabilities | 18 | 23 |
Commodity, foreign currency, and interest rate contracts | Other Assets | ||
Fair value of commodity contracts | ||
Fair value of derivative instruments, Assets | 2 | 3 |
Commodity, foreign currency, and interest rate contracts | Non Current Liabilities | ||
Fair value of commodity contracts | ||
Fair value of derivative instruments, Liabilities | $ 8 | $ 8 |
Financial Instruments, Deriva_7
Financial Instruments, Derivatives and Hedging Activities - Outstanding contracts (Details) lb in Millions, gal in Millions, bu in Millions, MMBTU in Millions | Dec. 31, 2018MMBTUlbgalbu |
Corn Commodity | |
Financial instruments, derivatives and hedging activities | |
Futures contract (in bushels for corn and gallons for ethanol) | bu | 85 |
Soy Bean Oil | |
Financial instruments, derivatives and hedging activities | |
Soybean oil futures contract (in pounds) | lb | 0 |
Natural Gas Commodity | |
Financial instruments, derivatives and hedging activities | |
Natural gas futures contract (in mmbtu) | MMBTU | 28 |
Ethanol Commodity | |
Financial instruments, derivatives and hedging activities | |
Futures contract (in bushels for corn and gallons for ethanol) | gal | 0 |
Financial Instruments, Deriva_8
Financial Instruments, Derivatives and Hedging Activities - Gains (Losses) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Gains or losses on derivatives | |||
Amount of Gains (Losses) Recognized in OCI on Derivatives | $ 8 | $ (16) | $ (17) |
Amount of Gains (Losses) Reclassified from AOCI into Income | (6) | (6) | (49) |
Commodity Contracts | |||
Gains or losses on derivatives | |||
Amount of Gains (Losses) Recognized in OCI on Derivatives | 8 | (22) | (15) |
Commodity Contracts | Cost of Sales | |||
Gains or losses on derivatives | |||
Amount of Gains (Losses) Reclassified from AOCI into Income | (6) | (5) | (45) |
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 | 1 | (2) |
Interest Rate Contract | Financing Costs, Net | |||
Gains or losses on derivatives | |||
Amount of Gains (Losses) Reclassified from AOCI into Income | (1) | $ (2) | $ (2) |
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 | (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) |
Financial Instruments, Deriva_9
Financial Instruments, Derivatives and Hedging Activities - FV (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Fair value of assets and liabilities | ||
Long-term debt | $ 1,954 | $ 1,845 |
Estimate of Fair Value Measurement | ||
Fair value of assets and liabilities | ||
Available for sale securities | 11 | 10 |
Derivative assets | 24 | 14 |
Derivative liabilities | 26 | 31 |
Long-term debt | 1,954 | 1,845 |
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 1 | ||
Fair value of assets and liabilities | ||
Available for sale securities | 11 | 10 |
Derivative assets | 4 | 3 |
Derivative liabilities | 6 | 11 |
Estimate of Fair Value Measurement | Fair Value, Inputs, Level 2 | ||
Fair value of assets and liabilities | ||
Derivative assets | 20 | 11 |
Derivative liabilities | 20 | 20 |
Long-term debt | $ 1,954 | $ 1,845 |
Financial Instruments, Deriv_10
Financial Instruments, Derivatives and Hedging Activities - Long-term debt (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Long-term debt | ||
Long-term debt, Fair value | $ 1,954 | $ 1,845 |
Fair value adjustment related to hedged fixed rate instrument debt instrument, Carrying amount | (1) | 1 |
Total long-term debt | 1,931 | 1,744 |
3.2% senior notes due October 1, 2026 | ||
Long-term debt | ||
Long-term debt, Fair value | 462 | 492 |
Long-term debt excluding FV adjustment, Carrying amount | $ 496 | $ 496 |
Debt, interest rate (as a percent) | 3.20% | 3.20% |
4.625% senior notes due November 1, 2020 | ||
Long-term debt | ||
Long-term debt, Fair value | $ 409 | $ 421 |
Long-term debt excluding FV adjustment, Carrying amount | $ 399 | $ 398 |
Debt, interest rate (as a percent) | 4.625% | 4.625% |
6.625% senior notes due April 15, 2037 | ||
Long-term debt | ||
Long-term debt, Fair value | $ 295 | $ 325 |
Long-term debt excluding FV adjustment, Carrying amount | $ 254 | $ 254 |
Debt, interest rate (as a percent) | 6.625% | 6.625% |
5.62% senior notes due March 25, 2020 | ||
Long-term debt | ||
Long-term debt, Fair value | $ 205 | $ 212 |
Long-term debt excluding FV adjustment, Carrying amount | $ 200 | $ 200 |
Debt, interest rate (as a percent) | 5.62% | 5.62% |
Term loan credit agreement due April 25, 2019 | ||
Long-term debt | ||
Long-term debt, Fair value | $ 165 | $ 395 |
Long-term debt excluding FV adjustment, Carrying amount | 165 | $ 395 |
Revolving credit facility | ||
Long-term debt | ||
Long-term debt, Fair value | 418 | |
Long-term debt excluding FV adjustment, Carrying amount | $ 418 |
Financing Arrangements - Total
Financing Arrangements - Total debt and 6% senior notes (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Financing Arrangements | ||
Total debt | $ 2,100 | $ 1,864 |
Financing Arrangements - Term L
Financing Arrangements - Term Loan (Details) $ in Millions | Oct. 25, 2017USD ($) | Aug. 18, 2017USD ($)item | Dec. 31, 2017USD ($) | Dec. 31, 2018USD ($) |
Term loan credit agreement due April 25, 2019 | ||||
Long-term debt | ||||
Number of borrowings | item | 3 | |||
Maximum borrowing capacity | $ 500 | |||
Term of the credit agreement | 18 months | |||
Aggregate principal amount | $ 420 | |||
Repayments of long-term debt | $ 25 | $ 230 | ||
Long-term debt excluding fair value adjustments | $ 395 | $ 165 | ||
1.8% senior notes due September 25, 2017 | ||||
Long-term debt | ||||
Repayments of long-term debt | $ 300 | |||
Debt, interest rate (as a percent) | 1.80% |
Financing Arrangements - Revolv
Financing Arrangements - Revolving credit agreement (Details) $ in Millions | 12 Months Ended | |
Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($) | |
Foreign line of credit | ||
Long-term debt | ||
Unused operating lines of credit | $ 507 | |
Revolving credit facility | ||
Long-term debt | ||
Debt instrument term | 5 years | |
Maximum borrowing capacity | $ 1,000 | |
Additional increase in borrowing capacity of the line of credit available at the entity's option | $ 500 | |
Number of extensions | item | 2 | |
Extension term | 1 year | |
Borrowings outstanding | $ 418 | |
Previously existing revolving credit agreement | ||
Long-term debt | ||
Maximum borrowing capacity | $ 1,000 |
Financing Arrangements - Long-t
Financing Arrangements - Long-term debt components (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended |
Dec. 31, 2017 | Dec. 31, 2018 | |
Debt | ||
Fair value adjustment related to hedged fixed rate debt | $ 1 | $ (1) |
Total long-term debt | 1,744 | 1,931 |
Short-term borrowings | 120 | 169 |
Total debt | $ 1,864 | $ 2,100 |
3.2% senior notes due October 1, 2026 | ||
Debt | ||
Debt, interest rate (as a percent) | 3.20% | 3.20% |
Long-term debt excluding fair value adjustments | $ 496 | $ 496 |
4.625% senior notes due November 1, 2020 | ||
Debt | ||
Debt, interest rate (as a percent) | 4.625% | 4.625% |
Long-term debt excluding fair value adjustments | $ 398 | $ 399 |
6.625% senior notes due April 15, 2037 | ||
Debt | ||
Debt, interest rate (as a percent) | 6.625% | 6.625% |
Long-term debt excluding fair value adjustments | $ 254 | $ 254 |
5.62% senior notes due March 25, 2020 | ||
Debt | ||
Debt, interest rate (as a percent) | 5.62% | 5.62% |
Long-term debt excluding fair value adjustments | $ 200 | $ 200 |
Term loan credit agreement due April 25, 2019 | ||
Debt | ||
Long-term debt excluding fair value adjustments | 395 | 165 |
Repayments of long-term debt | $ 25 | 230 |
Revolving credit facility | ||
Debt | ||
Long-term debt excluding fair value adjustments | $ 418 |
Financing Arrangements - Maturi
Financing Arrangements - Maturities (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Long-term debt maturities | ||
Long-term debt | $ 1,931 | $ 1,744 |
Guaranteed obligations of consolidated subsidiaries | 57 | $ 56 |
Long-term debt maturing in 2020 | ||
Long-term debt maturities | ||
Long-term debt | 600 | |
Long-term debt maturing in 2026 | ||
Long-term debt maturities | ||
Long-term debt | 500 | |
Long-term debt maturing in 2037 | ||
Long-term debt maturities | ||
Long-term debt | 250 | |
Long-term debt maturing in 2019 | ||
Long-term debt maturities | ||
Long-term debt | $ 165 |
Leases (Details)
Leases (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Leases | |||
Rental expense | $ 60 | $ 51 | $ 53 |
Minimum lease payments due on leases | |||
2,019 | 53 | ||
2,020 | 44 | ||
2,021 | 40 | ||
2,022 | 27 | ||
2,023 | 22 | ||
Balance thereafter | $ 27 |
Income Taxes - Provision for in
Income Taxes - Provision for income taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income before income taxes: | |||
U.S. | $ 121 | $ 226 | $ 176 |
Foreign | 500 | 543 | 566 |
Income before income taxes | 621 | 769 | 742 |
Current tax (benefit) expense: | |||
U.S. federal | 17 | (13) | 95 |
State and local | 1 | 4 | 8 |
Foreign | 172 | 179 | 148 |
Total current tax expense | 190 | 170 | 251 |
Deferred tax expense (benefit): | |||
U.S. federal | (14) | 77 | 13 |
State and local | (2) | 4 | 1 |
Foreign | (7) | (14) | (19) |
Total deferred tax expense (benefit) | (23) | 67 | (5) |
Total provision for income taxes | $ 167 | $ 237 | $ 246 |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax assets (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets attributable to: | ||
Employee benefit accruals | $ 20 | $ 20 |
Pension and postretirement plans | 23 | 20 |
Derivative contracts | 1 | 5 |
Net operating loss carryforwards | 26 | 32 |
Foreign tax credit carryforwards | 1 | |
Gross deferred tax assets | 71 | 77 |
Valuation allowance | (31) | (34) |
Net deferred tax assets | 40 | 43 |
Deferred tax liabilities attributable to: | ||
Property, plant and equipment | 177 | 185 |
Identified intangibles | 39 | 37 |
Other | 3 | 11 |
Gross deferred tax liabilities | 219 | 233 |
Net deferred tax liabilities | $ 179 | $ 190 |
Income Taxes - Operating loss c
Income Taxes - Operating loss carryforwards (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Operating losses | ||
Net operating loss carryforwards | $ 26 | $ 32 |
State | ||
Operating losses | ||
Net operating loss carryforwards | 11 | 9 |
Foreign | ||
Operating losses | ||
Net operating loss carryforwards | $ 15 | $ 23 |
Income Taxes - Tax credit carry
Income Taxes - Tax credit carryforward valuation allowance (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Tax credit carryforward valuation allowance | ||
Valuation allowance on foreign subsidiaries net deferred tax assets | $ 3 | $ 2 |
State | ||
Tax credit carryforward valuation allowance | ||
Loss carryforwards, valuation allowance | 11 | 9 |
Credit carryforwards, valuation allowance | 3 | 2 |
Foreign | ||
Tax credit carryforward valuation allowance | ||
Loss carryforwards, valuation allowance | $ 14 | $ 21 |
Income Taxes - Reconciliation o
Income Taxes - Reconciliation of effective tax rate (Details) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Reconciliation of effective tax rate | ||||||
Provision for tax at statutory rate (as a percent) | 21.00% | 35.00% | 35.00% | |||
Tax rate difference on foreign income (as a percent) | 5.30% | (5.60%) | (5.50%) | |||
State and local taxes - net (as a percent) | 0.70% | 0.30% | ||||
Tax impact of fluctuations in Mexican Pesos to US Dollar | (0.50%) | 2.40% | ||||
Net impact of U.S. foreign tax credits | 0.50% | 0.30% | (2.30%) | |||
Net tax impact of US / Canada settlement (as a percent) | 0.30% | (1.30%) | 3.20% | |||
Net impact of valuation allowance in Argentina | 1.00% | 2.00% | 1.00% | |||
Net impact of transition tax | 0.60% | 0.60% | 2.70% | |||
Net impact of U.S. deferred tax remeasurement | (4.90%) | (4.90%) | ||||
Net impact of provision for taxes on unremitted earnings | 4.30% | 0.30% | 0.30% | 4.30% | 0.50% | |
Other items - net (as a percent) | (2.10%) | (1.90%) | (1.50%) | |||
Provision at effective tax rate (as a percent) | 26.90% | 30.80% | 33.10% | |||
Mexico | ||||||
Reconciliation of effective tax rate | ||||||
Provision for tax at statutory rate (as a percent) | 30.00% | |||||
Pakistan | ||||||
Reconciliation of effective tax rate | ||||||
Provision for tax at statutory rate (as a percent) | 29.00% | |||||
Colombia | ||||||
Reconciliation of effective tax rate | ||||||
Provision for tax at statutory rate (as a percent) | 37.00% | |||||
Brazil | ||||||
Reconciliation of effective tax rate | ||||||
Provision for tax at statutory rate (as a percent) | 34.00% |
Income Taxes - Tax Cuts and Job
Income Taxes - Tax Cuts and Jobs Act (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||
Dec. 31, 2018 | Sep. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Income Taxes | |||||||
Provision for tax at statutory rate (as a percent) | 21.00% | 35.00% | 35.00% | ||||
Foreign subsidiary dividends received deduction percentage | 100.00% | ||||||
Incremental tax expense related to TCJA | $ 1 | $ 2 | |||||
Provisional TCJA impact, One-time transition tax | $ 21 | ||||||
Final TCJA impact, One-time transition tax | 4 | $ 25 | |||||
Provisional TCJA impact, Remeasurement of deferred tax assets and liabilities | (38) | ||||||
Final TCJA impact, Remeasurement of deferred tax assets and liabilities | (38) | ||||||
Provisional TCJA impact, Net impact of provision for taxes on unremitted earnings | $ 2 | 33 | |||||
Final TCJA impact, Net impact of provision for taxes on unremitted earnings | 35 | ||||||
Provisional TCJA impact, Other items, net | $ (3) | 7 | |||||
Final TCJA impact, Other items, net | 4 | ||||||
Provisional TCJA impact, Net impact of the TCJA | $ 1 | $ 2 | $ 23 | $ 23 | |||
Final TCJA impact, Net impact of the TCJA | $ 26 | ||||||
Net impact of transition tax | 0.60% | 0.60% | 2.70% | ||||
Net impact of U.S. deferred tax remeasurement | (4.90%) | (4.90%) | |||||
Net impact of provision for taxes on unremitted earnings | 4.30% | 0.30% | 0.30% | 4.30% | 0.50% | ||
TCJA other items, net percentage | 0.40% | 0.90% |
Income Taxes - U.S.-Canada trea
Income Taxes - U.S.-Canada treaty (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2017 | |
Income taxes | |||||
Net tax impact of US / Canada settlement | $ 24 | $ 10 | |||
Net tax impact of US / Canada settlement (as a percent) | 0.30% | (1.30%) | 3.20% | ||
Settlement of claims with Canadian tax authority | $ 42 | $ 63 | |||
Interest and penalties through tax expense | $ 2 | ||||
Tax impact of change in Mexican Pesos to US Dollars | $ 4 | $ 18 | |||
Tax impact of change in Mexican Pesos to US Dollars, percentage points | 0.50% | 2.40% | |||
Pre-tax gain on foreign currency exchange amounts | $ 0 | $ 0 | |||
2014-2016 | |||||
Income taxes | |||||
Net tax impact of US / Canada settlement | $ 7 | ||||
Net tax impact of US / Canada settlement (as a percent) | 1.00% | ||||
2,016 | |||||
Income taxes | |||||
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 (as a percent) | 3.20% |
Income Taxes - Valuation allowa
Income Taxes - Valuation allowance (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Income Taxes | |||
Increase in valuation allowance of foreign subsidiary net deferred tax assets | $ 6 | $ 16 | $ 7 |
Percentage increase in valuation allowance of foreign subsidiary net deferred tax assets | 1 | 2 | 1 |
Income Taxes - Undistributed ea
Income Taxes - Undistributed earnings (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Undistributed earnings | ||
Undistributed earnings on foreign subsidiaries tax provision | $ 2 | $ 33 |
Undistributed earnings of foreign subsidiaries | $ 3,000 |
Income Taxes - Unrecognized tax
Income Taxes - Unrecognized tax benefits (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Income Taxes | ||
Balance at beginning of period | $ 39 | $ 86 |
Reductions for tax positions related to prior years | (2) | |
Additions based on tax positions related to the current year | 12 | |
Settlements | (58) | |
Reductions related to a lapse in the statute of limitations | (7) | (1) |
Balance at end of period | 30 | 39 |
Unrecognized tax benefit that, if recognized, could affect the effective tax rate in future periods | 10 | |
Remaining unrecognized tax benefits | 20 | |
Unrecognized tax benefit, income tax receivable | 19 | |
Unrecognized tax foreign benefit that would be created as part of Canada and US process | 1 | |
Interest expense accrued, net of interest income | 2 | $ 2 |
Amount of unrecognized tax benefits that may be recognized within 12 | 8 | |
Unrecognized tax benefits that, if recognized, would affect the effective tax rate | $ 4 |
Benefit Plans - Pension Obligat
Benefit Plans - Pension Obligation and Funded Status (Details) - Pension Plan - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
US | |||
Benefit obligation | |||
Balance at the beginning of the period | $ 393 | $ 367 | |
Service cost | 6 | 6 | $ 6 |
Interest cost | 13 | 13 | 14 |
Benefits paid | (26) | (23) | |
Actuarial (gain) loss | (27) | 30 | |
Curtailment / settlement / amendments | (2) | ||
Balance at the end of the period | 357 | 393 | 367 |
Fair value of plan assets | |||
Balance at the beginning of the period | 404 | 368 | |
Actual return on plan assets | (25) | 59 | |
Cash contributions made in period | 2 | ||
Benefits paid | (26) | (23) | |
Plan settlements | (2) | ||
Balance at the end of the period | 353 | 404 | 368 |
Funded status | (4) | 11 | |
Non-US | |||
Benefit obligation | |||
Balance at the beginning of the period | 248 | 223 | |
Service cost | 3 | 3 | 3 |
Interest cost | 10 | 11 | 10 |
Benefits paid | (12) | (12) | |
Actuarial (gain) loss | (8) | 7 | |
Foreign currency translation | (18) | 16 | |
Balance at the end of the period | 223 | 248 | 223 |
Fair value of plan assets | |||
Balance at the beginning of the period | 235 | 211 | |
Actual return on plan assets | 17 | ||
Cash contributions made in period | 4 | 5 | |
Benefits paid | (12) | (12) | |
Foreign currency translation | (20) | 14 | |
Balance at the end of the period | 207 | 235 | $ 211 |
Funded status | $ (16) | $ (13) |
Benefit Plans - Pension amounts
Benefit Plans - Pension amounts recognized (Details) - Pension Plan - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Amounts recognized in accumulated other comprehensive loss, excluding tax effects, that have not yet been recognized as components of net periodic benefit cost | |||
Accumulated benefit obligation | $ 543 | $ 603 | |
US | |||
Amounts recognized in the Consolidated Balance Sheets | |||
Non-current asset | 7 | 23 | |
Current liabilities | (1) | (2) | |
Non-current liabilities | (10) | (10) | |
Net asset (liability) recognized | (4) | 11 | |
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 | 40 | 21 | |
Prior service cost | (6) | (6) | |
Net amount recognized | 34 | 15 | |
Information about plan obligations and assets for plans with an accumulated benefit obligation in excess of plan assets | |||
Projected benefit obligation | 11 | 12 | |
Accumulated benefit obligation | 9 | 11 | |
Components of net periodic benefit cost | |||
Service cost | 6 | 6 | $ 6 |
Interest cost | 13 | 13 | 14 |
Expected return on plan assets | (21) | (21) | (20) |
Amortization of actuarial loss | 1 | ||
Amortization of prior service credit | (1) | ||
Net periodic benefit cost | (2) | (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) | 19 | (7) | 10 |
Prior service cost | (6) | ||
Amortization of actuarial loss | (1) | ||
Amortization of prior service credit | 1 | ||
Total recorded in other comprehensive income | 19 | (6) | 3 |
Net periodic benefit cost | (2) | (3) | 1 |
Total recorded in other comprehensive income and net periodic benefit cost | 17 | (9) | 4 |
Non-US | |||
Amounts recognized in the Consolidated Balance Sheets | |||
Non-current asset | 32 | 37 | |
Current liabilities | (1) | (1) | |
Non-current liabilities | (47) | (49) | |
Net asset (liability) recognized | (16) | (13) | |
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 | 57 | 55 | |
Transition obligation | 1 | 1 | |
Prior service cost | (1) | (1) | |
Net amount recognized | 57 | 55 | |
Information about plan obligations and assets for plans with an accumulated benefit obligation in excess of plan assets | |||
Projected benefit obligation | 49 | 51 | |
Accumulated benefit obligation | 41 | 41 | |
Fair value of plan assets | 2 | 2 | |
Components of net periodic benefit cost | |||
Service cost | 3 | 3 | 3 |
Interest cost | 10 | 11 | 10 |
Expected return on plan assets | (9) | (10) | (10) |
Amortization of actuarial loss | 2 | 2 | 2 |
Settlement loss | 1 | ||
Net periodic benefit cost | 6 | 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) | 4 | (3) | 6 |
Prior service cost | (1) | ||
Amortization of actuarial loss | (2) | (2) | (2) |
Total recorded in other comprehensive income | 2 | (5) | 3 |
Net periodic benefit cost | 6 | 6 | 6 |
Total recorded in other comprehensive income and net periodic benefit cost | $ 8 | $ 1 | $ 9 |
Benefit Plans - Pension assumpt
Benefit Plans - Pension assumptions (Details) - Pension Plan | 12 Months Ended | |||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
US | ||||
Weighted average assumptions used to determine the company's obligations | ||||
Discount rate (as a percent) | 4.38% | 3.70% | ||
Rate of compensation increase (as a percent) | 4.31% | 4.42% | ||
Weighted average assumptions used to determine the company's net periodic benefit cost | ||||
Discount rate (as a percent) | 3.70% | 4.30% | 4.30% | |
Expected long-term return on plan assets (as a percent) | 5.30% | 5.75% | 5.75% | |
Rate of compensation increase (as a percent) | 4.42% | 4.54% | 4.71% | |
US | Pro Forma | ||||
Weighted average assumptions used to determine the company's net periodic benefit cost | ||||
Expected long-term return on plan assets (as a percent) | 5.30% | |||
Non-US | ||||
Weighted average assumptions used to determine the company's obligations | ||||
Discount rate (as a percent) | 4.33% | 4.02% | ||
Rate of compensation increase (as a percent) | 3.63% | 3.58% | ||
Weighted average assumptions used to determine the company's net periodic benefit cost | ||||
Discount rate (as a percent) | 4.02% | 4.34% | 4.57% | |
Expected long-term return on plan assets (as a percent) | 4.31% | 5.29% | 5.41% | |
Rate of compensation increase (as a percent) | 3.58% | 3.62% | 3.73% | |
Canada | Pro Forma | ||||
Weighted average assumptions used to determine the company's net periodic benefit cost | ||||
Expected long-term return on plan assets (as a percent) | 3.86% |
Benefit Plans - Pension plan as
Benefit Plans - Pension plan asset weighted average asset allocation (Details) - Pension Plan | Dec. 31, 2018 | Dec. 31, 2017 |
US | ||
Weighted average asset allocation | ||
Weighted average asset allocation (as a percent) | 100.00% | 100.00% |
US | Equity securities | ||
Weighted average asset allocation | ||
Weighted average asset allocation (as a percent) | 19.00% | 26.00% |
US | Equity securities | Minimum | ||
Plan assets | ||
Plan assets allocation percentage | 15.00% | |
US | Equity securities | Maximum | ||
Plan assets | ||
Plan assets allocation percentage | 25.00% | |
US | Debt securities - Fixed income | ||
Weighted average asset allocation | ||
Weighted average asset allocation (as a percent) | 80.00% | 73.00% |
US | Debt securities - Fixed income | Minimum | ||
Weighted average asset allocation | ||
Weighted average asset allocation (as a percent) | 75.00% | |
US | Debt securities - Fixed income | Maximum | ||
Weighted average asset allocation | ||
Weighted average asset allocation (as a percent) | 85.00% | |
US | Cash and other | ||
Weighted average asset allocation | ||
Weighted average asset allocation (as a percent) | 1.00% | 1.00% |
Non-US | ||
Weighted average asset allocation | ||
Weighted average asset allocation (as a percent) | 100.00% | 100.00% |
Non-US | Equity securities | ||
Weighted average asset allocation | ||
Weighted average asset allocation (as a percent) | 16.00% | 39.00% |
Non-US | Debt securities - Fixed income | ||
Weighted average asset allocation | ||
Weighted average asset allocation (as a percent) | 64.00% | 46.00% |
Non-US | Cash and other | ||
Weighted average asset allocation | ||
Weighted average asset allocation (as a percent) | 20.00% | 15.00% |
Benefit Plans - Pension plan _2
Benefit Plans - Pension plan assets by category and FV (Details) - Pension Plan - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
US | |||
Plan assets | |||
Fair value of plan assets | $ 353 | $ 404 | $ 368 |
Expected contribution in next fiscal year | 1 | ||
US | Equity index - U.S. | |||
Plan assets | |||
Fair value of plan assets | 33 | 51 | |
US | Equity index - International | |||
Plan assets | |||
Fair value of plan assets | 35 | 55 | |
US | Fixed income index- Long bond | |||
Plan assets | |||
Fair value of plan assets | $ 258 | 273 | |
Fixed income securities maturity (in years) | 10 years | ||
US | Fixed income index - Long government bond | |||
Plan assets | |||
Fair value of plan assets | $ 24 | 21 | |
Fixed income securities maturity (in years) | 10 years | ||
US | Cash | |||
Plan assets | |||
Fair value of plan assets | $ 3 | 4 | |
US | Fair Value, Inputs, Level 2 | |||
Plan assets | |||
Fair value of plan assets | 353 | 404 | |
US | Fair Value, Inputs, Level 2 | Equity index - U.S. | |||
Plan assets | |||
Fair value of plan assets | 33 | 51 | |
US | Fair Value, Inputs, Level 2 | Equity index - International | |||
Plan assets | |||
Fair value of plan assets | 35 | 55 | |
US | Fair Value, Inputs, Level 2 | Fixed income index- Long bond | |||
Plan assets | |||
Fair value of plan assets | 258 | 273 | |
US | Fair Value, Inputs, Level 2 | Fixed income index - Long government bond | |||
Plan assets | |||
Fair value of plan assets | 24 | 21 | |
US | Fair Value, Inputs, Level 2 | Cash | |||
Plan assets | |||
Fair value of plan assets | 3 | 4 | |
Non-US | |||
Plan assets | |||
Fair value of plan assets | 207 | 235 | $ 211 |
Expected contribution in next fiscal year | 3 | ||
Non-US | Equity index - U.S. | |||
Plan assets | |||
Fair value of plan assets | 3 | 12 | |
Non-US | Equity index - Canada | |||
Plan assets | |||
Fair value of plan assets | 13 | 22 | |
Non-US | Equity index - International | |||
Plan assets | |||
Fair value of plan assets | 15 | 52 | |
Non-US | Equity index - Real estate | |||
Plan assets | |||
Fair value of plan assets | 2 | 5 | |
Non-US | Fixed income index - Intermediate bond | |||
Plan assets | |||
Fair value of plan assets | 34 | 25 | |
Non-US | Fixed income index- Long bond | |||
Plan assets | |||
Fair value of plan assets | 99 | 84 | |
Non-US | Other | |||
Plan assets | |||
Fair value of plan assets | 24 | 24 | |
Non-US | Cash | |||
Plan assets | |||
Fair value of plan assets | 17 | 11 | |
Non-US | Fair Value, Inputs, Level 1 | |||
Plan assets | |||
Fair value of plan assets | 2 | 2 | |
Non-US | Fair Value, Inputs, Level 1 | Cash | |||
Plan assets | |||
Fair value of plan assets | 2 | 2 | |
Non-US | Fair Value, Inputs, Level 2 | |||
Plan assets | |||
Fair value of plan assets | 205 | 233 | |
Non-US | Fair Value, Inputs, Level 2 | Equity index - U.S. | |||
Plan assets | |||
Fair value of plan assets | 3 | 12 | |
Non-US | Fair Value, Inputs, Level 2 | Equity index - Canada | |||
Plan assets | |||
Fair value of plan assets | 13 | 22 | |
Non-US | Fair Value, Inputs, Level 2 | Equity index - International | |||
Plan assets | |||
Fair value of plan assets | 15 | 52 | |
Non-US | Fair Value, Inputs, Level 2 | Equity index - Real estate | |||
Plan assets | |||
Fair value of plan assets | 2 | 5 | |
Non-US | Fair Value, Inputs, Level 2 | Fixed income index - Intermediate bond | |||
Plan assets | |||
Fair value of plan assets | 34 | 25 | |
Non-US | Fair Value, Inputs, Level 2 | Fixed income index- Long bond | |||
Plan assets | |||
Fair value of plan assets | 99 | 84 | |
Non-US | Fair Value, Inputs, Level 2 | Other | |||
Plan assets | |||
Fair value of plan assets | 24 | 24 | |
Non-US | Fair Value, Inputs, Level 2 | Cash | |||
Plan assets | |||
Fair value of plan assets | $ 15 | $ 9 |
Benefit Plans - Pension benefit
Benefit Plans - Pension benefit payments (Details) - Pension Plan - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
US | ||
Benefit plans | ||
Cash contributions made in period | $ 2 | |
Expected contribution in next fiscal year | 1 | |
Expected future benefit payments | ||
2,019 | 19 | |
2,020 | 20 | |
2,021 | 22 | |
2,022 | 22 | |
2,023 | 24 | |
Years 2024 - 2028 | 123 | |
Non-US | ||
Benefit plans | ||
Cash contributions made in period | 4 | $ 5 |
Expected contribution in next fiscal year | 3 | |
Expected future benefit payments | ||
2,019 | 11 | |
2,020 | 11 | |
2,021 | 11 | |
2,022 | 12 | |
2,023 | 13 | |
Years 2024 - 2028 | $ 66 |
Benefit Plans - Defined contrib
Benefit Plans - Defined contribution plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Amounts charged to expense | |||
Amounts charged to expense for defined contribution plans | $ 21 | $ 22 | $ 20 |
Benefit Plans - Postretirement
Benefit Plans - Postretirement funded status (Details) - Postemployment Retirement Benefits - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Benefit obligation | |||
Balance at the beginning of the period | $ 70 | $ 67 | |
Service cost | 1 | 1 | $ 1 |
Interest cost | 3 | 3 | 2 |
Employee contributions | 1 | ||
PLan curtailments | (1) | ||
Actuarial (gain) loss | (2) | 2 | |
Benefits paid | (4) | (4) | |
Foreign currency translation | (3) | ||
Balance at the end of the period | 64 | 70 | $ 67 |
Funded status | $ (64) | $ (70) |
Benefit Plans - Postretiremen_2
Benefit Plans - Postretirement amounts recognized (Details) - Postemployment Retirement Benefits - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Amounts recognized in the Consolidated Balance Sheets | |||
Current liabilities | $ (4) | $ (4) | |
Non-current liabilities | (60) | (66) | |
Net asset (liability) recognized | (64) | (70) | |
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 | 8 | 11 | |
Prior service cost | (4) | (6) | |
Net amount recognized | 4 | 5 | |
Components of net periodic benefit cost | |||
Service cost | 1 | 1 | $ 1 |
Interest cost | 3 | 3 | 2 |
Amortization of prior service credit | (2) | (3) | (2) |
Net periodic benefit cost | 2 | 1 | 1 |
Amount included in accumulated other comprehensive loss for prior service credit expected to be recognized in net periodic benefit cost | (2) | ||
Amounts recorded in other comprehensive income and net periodic benefit cost | |||
Net actuarial loss (gain) | (3) | 2 | 2 |
Amortization of prior service credit | 2 | 3 | 2 |
Total recorded in other comprehensive income | (1) | 5 | 4 |
Net periodic benefit cost | 2 | 1 | 1 |
Total recorded in other comprehensive income and net periodic benefit cost | $ 1 | $ 6 | $ 5 |
Benefit Plans - Postretiremen_3
Benefit Plans - Postretirement assumptions and trends (Details) - Postemployment Retirement Benefits | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Weighted average assumptions used to determine the company's obligations | |||
Discount rate (as a percent) | 5.24% | 4.92% | |
Weighted average assumptions used to determine the company's net periodic benefit cost | |||
Discount rate (as a percent) | 4.93% | 5.46% | 5.30% |
US | |||
Assumptions used in measuring benefit obligation | |||
2018 increase in per capita cost (as a percent) | 6.30% | ||
Ultimate trend (as a percent) | 4.50% | ||
Year ultimate trend reached | 2,037 | ||
Canada | |||
Assumptions used in measuring benefit obligation | |||
2018 increase in per capita cost (as a percent) | 5.92% | ||
Ultimate trend (as a percent) | 4.00% | ||
Year ultimate trend reached | 2,040 | ||
Brazil | |||
Assumptions used in measuring benefit obligation | |||
2018 increase in per capita cost (as a percent) | 7.90% | ||
Ultimate trend (as a percent) | 7.90% | ||
Year ultimate trend reached | 2,018 |
Benefit Plans - Postretiremen_4
Benefit Plans - Postretirement cost sensitivities (Details) - Postemployment Retirement Benefits $ in Millions | 12 Months Ended |
Dec. 31, 2018USD ($) | |
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 | 5 |
One-percentage point decrease, effect on service cost and interest cost components | (1) |
One-percentage point decrease, effect on year-end benefit obligations | $ (7) |
Benefit Plans - Postretiremen_5
Benefit Plans - Postretirement benefit payments (Details) - Postemployment Retirement Benefits $ in Millions | Dec. 31, 2018USD ($) |
Expected future benefit payments | |
2,019 | $ 4 |
2,020 | 4 |
2,021 | 4 |
2,022 | 5 |
2,023 | 5 |
Years 2024 - 2028 | $ 23 |
Benefit Plans - Multiemployer P
Benefit Plans - Multiemployer Plans (Details) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Multiemployer Plans | |||
Multiemployer benefit plan that company contributes to | item | 1 | ||
Multiemployer Plan contributions | $ | $ 12 | $ 13 | $ 14 |
Supplementary Information - Con
Supplementary Information - Consolidated Balance Sheets (Details) - USD ($) $ in Millions | Dec. 31, 2018 | Dec. 31, 2017 |
Accounts receivable net: | ||
Accounts receivable trade | $ 802 | $ 760 |
Accounts receivable other | 157 | 209 |
Allowance for doubtful accounts | (8) | (8) |
Total accounts receivable — net | 951 | 961 |
Inventories: | ||
Finished and in process | 522 | 495 |
Raw materials | 250 | 278 |
Manufacturing supplies and other | 52 | 50 |
Total inventories | 824 | 823 |
Accrued liabilities: | ||
Compensation-related costs | 81 | 101 |
Income taxes payable | 27 | 22 |
Dividends payable | 42 | 44 |
Accrued interest | 15 | 15 |
Taxes payable other than income taxes | 33 | 37 |
Other | 127 | 125 |
Total accrued liabilities | 325 | 344 |
Non-current liabilities: | ||
Employees pension, indemnity and postretirement | 122 | 121 |
Other | 95 | 106 |
Total non-current liabilities | $ 217 | $ 227 |
Supplementary Information - C_2
Supplementary Information - Consolidated Statements of Income (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Other income -net: | |||
Insurance settlement | $ 9 | ||
Value-added tax recovery | $ 5 | 6 | $ 5 |
Other | 5 | 3 | (1) |
Other income - net | 10 | 18 | 4 |
Financing costs-net: | |||
Interest expense, net of amounts capitalized | 81 | 79 | 73 |
Interest income | (9) | (11) | (10) |
Foreign currency transaction losses | 14 | 5 | 3 |
Financing Costs, Net | 86 | 73 | 66 |
Interest capitalized | $ 3 | $ 4 | $ 4 |
Supplementary Information - C_3
Supplementary Information - Consolidated Statements of Cash Flow (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Supplementary Cash Flow Information | |||
Share-based compensation expense | $ 21 | $ 26 | $ 28 |
Other | 18 | 13 | 16 |
Total other non-cash charges to net income | 39 | 39 | 44 |
Interest paid | 73 | 77 | 59 |
Income taxes paid | $ 231 | $ 289 | $ 254 |
Equity - Preferred stock (Detai
Equity - Preferred stock (Details) - $ / shares | Dec. 31, 2018 | Dec. 31, 2017 |
Preferred stock: | ||
Preferred stock, authorized (in shares) | 25,000,000 | 25,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Equity - Treasury stock (Detail
Equity - Treasury stock (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | Feb. 05, 2019 | Nov. 05, 2018 | Feb. 05, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Oct. 22, 2018 | Dec. 12, 2014 |
Treasury stock: | ||||||||
Repurchases of common stock (in dollars) | $ 657 | $ 123 | ||||||
Treasury Stock | ||||||||
Treasury stock: | ||||||||
Purchase/acquisition of treasury stock (in shares) | 5,847 | 1,039 | 2 | |||||
Repurchases of common stock (in dollars) | $ 624 | $ 123 | ||||||
ASR agreement | ||||||||
Treasury stock: | ||||||||
Payment made for repurchase of shares | $ 455 | |||||||
Purchase/acquisition of treasury stock (in shares) | 4,000 | 4,000 | ||||||
Repurchases of common stock (in dollars) | $ 423 | $ 392 | ||||||
VWAP (in dollars per share) | $ 98.04 | $ 98.04 | ||||||
Amount of cash returned from upfront payment in repurchase of stock | $ 63 | |||||||
2018 Stock Repurchase Program | ||||||||
Treasury stock: | ||||||||
Shares authorized to be repurchased (in shares) | 8,000 | |||||||
2014 Stock Repurchase Program | ||||||||
Treasury stock: | ||||||||
Shares authorized to be repurchased (in shares) | 5,000 |
Equity - Share activity (Detail
Equity - Share activity (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Increase (decrease) in common stock, number of shares | |||
Balance at beginning of period (in shares) | 71,996 | 72,414 | 71,616 |
Stock options exercised | 209 | 443 | 636 |
Purchase/acquisition of treasury stock (in shares) | (5,847) | (1,039) | (2) |
Balance at end of period (in shares) | 66,526 | 71,996 | 72,414 |
Restricted Stock Units (RSUs) | |||
Increase (decrease) in common stock, number of shares | |||
Issuance of share-based awards (in shares) | 100 | 103 | 94 |
Performance shares and other share-based awards | |||
Increase (decrease) in common stock, number of shares | |||
Issuance of share-based awards (in shares) | 68 | 75 | 70 |
Common Stock | |||
Increase (decrease) in common stock, number of shares | |||
Balance at beginning of period (in shares) | 77,811 | 77,811 | 77,811 |
Balance at end of period (in shares) | 77,811 | 77,811 | 77,811 |
Treasury Stock | |||
Increase (decrease) in common stock, number of shares | |||
Balance at beginning of period (in shares) | 5,815 | 5,397 | 6,195 |
Stock options exercised | (209) | (443) | (636) |
Purchase/acquisition of treasury stock (in shares) | 5,847 | 1,039 | 2 |
Balance at end of period (in shares) | 11,285 | 5,815 | 5,397 |
Treasury Stock | Restricted Stock Units (RSUs) | |||
Increase (decrease) in common stock, number of shares | |||
Issuance of share-based awards (in shares) | (100) | (103) | (94) |
Treasury Stock | Performance shares and other share-based awards | |||
Increase (decrease) in common stock, number of shares | |||
Issuance of share-based awards (in shares) | (68) | (75) | (70) |
Equity - Share-based payments (
Equity - Share-based payments (Details) - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Share-based compensation expense | |||
Pre-tax compensation expense | $ 21 | $ 26 | $ 28 |
Income tax benefit | (3) | (8) | (11) |
Total share-based compensation expense, net of income taxes | $ 18 | 18 | 17 |
Stock Incentive Plan | |||
Shares authorized under Stock Incentive Plan | 8 | ||
Shares available for future grants under Stock Incentive Plan | 3.3 | ||
Employee Stock Option | |||
Share-based compensation expense | |||
Pre-tax compensation expense | $ 5 | 7 | 9 |
Income tax benefit | (1) | (2) | (3) |
Total share-based compensation expense, net of income taxes | 4 | 5 | 6 |
Restricted Stock Units (RSUs) | |||
Share-based compensation expense | |||
Pre-tax compensation expense | 12 | 13 | 12 |
Income tax benefit | (2) | (4) | (5) |
Total share-based compensation expense, net of income taxes | 10 | 9 | 7 |
Performance shares and other share-based awards | |||
Share-based compensation expense | |||
Pre-tax compensation expense | 4 | 6 | 7 |
Income tax benefit | (2) | (3) | |
Total share-based compensation expense, net of income taxes | $ 4 | $ 4 | $ 4 |
Equity - Stock options (Details
Equity - Stock options (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Stock options, Number of Options | |||
Outstanding at the beginning of the period (in shares) | 2,095 | ||
Granted (in shares) | 215 | 278 | |
Exercised (in shares) | (209) | (443) | (636) |
Cancelled (in shares) | (22) | ||
Outstanding at the end of the period (in shares) | 2,079 | 2,095 | |
Exercisable at the end of the period (in shares) | 1,599 | ||
Stock options, Weighted Average Exercise Price per Share | |||
Outstanding at the beginning of the period (in dollars per share) | $ 71.81 | ||
Granted (in dollars per share) | 133.61 | ||
Exercised (in dollars per share) | 48.50 | ||
Cancelled (in dollars per share) | 99.81 | ||
Outstanding at the end of the period (in dollars per share) | 80.25 | $ 71.81 | |
Exercisable at the end of the period (in dollars per share) | $ 67.85 | ||
Additional information pertaining to stock options | |||
Average Remaining Contractual Term, Outstanding | 5 years 6 months 4 days | 5 years 10 months 13 days | |
Average Remaining Contractual Term, Exercisable | 4 years 8 months 5 days | ||
Aggregate Intrinsic Value, Outstanding (in dollars) | $ 42 | $ 142 | |
Aggregate Intrinsic Value, Exercisable (in dollars) | 42 | ||
Cash received from exercise of stock options | $ 10 | $ 20 | $ 29 |
Weighted average grant date fair value of stock options granted (per share) | $ 24.01 | $ 23.90 | $ 18.73 |
Total intrinsic value of stock options exercised | $ 15 | $ 35 | $ 46 |
Employee Stock Option | |||
Share-based compensation | |||
Term of award | 10 years | ||
Period of vesting | 3 years | ||
Required service period | 1 year | ||
Assumptions used to measure the fair value of awards | |||
Expected life | 5 years 6 months | 5 years 6 months | 5 years 6 months |
Risk-free interest rate (as a percent) | 2.50% | 1.90% | 1.40% |
Expected volatility (as a percent) | 19.80% | 22.50% | 23.40% |
Expected dividend yield (as a percent) | 1.80% | 1.70% | 1.80% |
Additional information pertaining to stock options | |||
Unrecognized compensation cost | $ 3 | ||
Weighted-average period for amortization of unrecognized compensation cost | 1 year 9 months 18 days |
Equity - Restricted stock units
Equity - Restricted stock units (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 12 Months Ended | |||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Other disclosures | ||||
Share-based payments subject to redemption | $ 37 | $ 36 | $ 30 | $ 24 |
Restricted Stock Units (RSUs) | ||||
Share-based compensation | ||||
Vesting terms | 3 years | |||
Service period over which compensation expense would be amortized | 1 year | |||
Restricted stock unit activity | ||||
Non-vested at the beginning of the period (in shares) | 387 | |||
Granted (in shares) | 114 | |||
Vested (in shares) | (137) | |||
Cancelled (in shares) | (20) | |||
Non-vested at the end of the period (in shares) | 344 | 387 | ||
Weighted-average fair value per share | ||||
Non-vested at the beginning of the period (in dollars per share) | $ 100.13 | |||
Granted (in dollars per share) | 128.76 | |||
Vested (in dollars per share) | 84.05 | |||
Cancelled (in dollars per share) | 114.98 | |||
Non-vested at the end of the period (in dollars per share) | $ 115.06 | $ 100.13 | ||
Other disclosures | ||||
Fair value of awards vested during the year | $ 15 | $ 18 | $ 15 | |
Unrecognized compensation cost | $ 13 | |||
Weighted-average period for amortization of unrecognized compensation cost | 1 year 9 months 18 days | |||
Share-based payments subject to redemption | $ 26 | $ 25 |
Equity - Performance shares (De
Equity - Performance shares (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 1 Months Ended | 12 Months Ended | |||
Feb. 28, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Share-based compensation | |||||
Share-based payments subject to redemption | $ 37 | $ 36 | $ 30 | $ 24 | |
Performance Shares | Long Term Incentive Plan | |||||
Share-based compensation | |||||
Performance shares calculation period (in years) | 3 years | ||||
Vesting terms | 3 years | ||||
Granted (in shares) | 27 | 38 | 44 | ||
Weighted-average fair value per share, Granted (in dollars per share) | $ 141.91 | $ 114.08 | $ 131.34 | ||
Cancelled (in shares) | 16 | ||||
Unrecognized compensation cost | $ 3 | ||||
Remaining requisite service period (in years) | 1 year 8 months 12 days | ||||
Share-based payments subject to redemption | $ 10 | $ 11 | |||
Performance Shares | Long Term Incentive Plan | Minimum | |||||
Share-based compensation | |||||
Performance shares available for vesting (as a percent) | 0.00% | ||||
Performance Shares | Long Term Incentive Plan | Maximum | |||||
Share-based compensation | |||||
Performance shares available for vesting (as a percent) | 200.00% | ||||
Performance Shares Award Granted In 2015 | Long Term Incentive Plan | |||||
Share-based compensation | |||||
Award pay out achieved (as a percent) | 200.00% | ||||
Vested (in shares) | 92 | ||||
Performance Shares Award Granted in 2018 | |||||
Share-based compensation | |||||
Estimated pay out (as a percent) | 0.00% | ||||
Performance Shares Award Granted in 2017 | |||||
Share-based compensation | |||||
Estimated pay out (as a percent) | 0.00% | ||||
Performance Shares Award Granted in 2016 | |||||
Share-based compensation | |||||
Estimated pay out (as a percent) | 0.00% |
Equity - Other share-based awar
Equity - Other share-based awards under the SIP (Details) shares in Thousands | 12 Months Ended | ||
Dec. 31, 2018USD ($)shares | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Other share-based awards under the SIP | |||
Total share-based compensation expense included in net income | $ 21,000,000 | $ 26,000,000 | $ 28,000,000 |
Compensation Arrangement | |||
Other share-based awards under the SIP | |||
Amount of Directors' retainer paid in stock | $ 110,000 | ||
Percentage of additional Directors' retainer paid in stock | 50 | ||
Restricted Stock Units (RSUs) | |||
Other share-based awards under the SIP | |||
Total share-based compensation expense included in net income | $ 12,000,000 | 13,000,000 | 12,000,000 |
Restricted Stock Units (RSUs) | Compensation Arrangement | |||
Other share-based awards under the SIP | |||
Total share-based compensation expense included in net income | $ 1,000,000 | $ 1,000,000 | $ 1,000,000 |
Awards outstanding (in shares) | shares | 191 | ||
Carrying value of share units outstanding | $ 11,000,000 |
Equity - AOCI (Details)
Equity - AOCI (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Accumulated Other Comprehensive Loss | |||
Balance at the beginning of the period | $ 2,891 | ||
Balance at the end of the period | 2,388 | $ 2,891 | |
Cumulative Translation Adjustment | |||
Accumulated Other Comprehensive Loss | |||
Balance at the beginning of the period | (951) | (1,008) | $ (1,025) |
Other comprehensive (loss) income before reclassification adjustments | (129) | 57 | 17 |
Net other comprehensive (loss) income | (129) | 57 | 17 |
Balance at the end of the period | (1,080) | (951) | (1,008) |
Deferred (Loss) Gain on Hedging Activities | |||
Accumulated Other Comprehensive Loss | |||
Balance at the beginning of the period | (13) | (7) | (29) |
Other comprehensive (loss) income before reclassification adjustments | 8 | (16) | (17) |
Amount reclassified from accumulated OCI | 6 | 6 | 49 |
Tax (provision) benefit | (4) | 4 | (10) |
Net other comprehensive (loss) income | 10 | (6) | 22 |
Other | (2) | ||
Balance at the end of the period | (5) | (13) | (7) |
Deferred (Loss) Gain on Hedging Activities | ASU 2018-02 | |||
Accumulated Other Comprehensive Loss | |||
Adoption of ASU | (2) | ||
Pension and other postretirement plans | |||
Accumulated Other Comprehensive Loss | |||
Balance at the beginning of the period | (51) | (56) | (47) |
Other comprehensive (loss) income before reclassification adjustments | (20) | 8 | (14) |
Amount reclassified from accumulated OCI | (2) | 1 | |
Tax (provision) benefit | 5 | (1) | 4 |
Net other comprehensive (loss) income | (15) | 5 | (9) |
Other | (3) | ||
Balance at the end of the period | (69) | (51) | (56) |
Pension and other postretirement plans | ASU 2018-02 | |||
Accumulated Other Comprehensive Loss | |||
Adoption of ASU | (3) | ||
Unrealized (Loss) Gain on Investment | |||
Accumulated Other Comprehensive Loss | |||
Balance at the beginning of the period | 2 | (1) | |
Other comprehensive (loss) income before reclassification adjustments | 3 | 1 | |
Tax (provision) benefit | (1) | ||
Net other comprehensive (loss) income | 2 | 1 | |
Other | (2) | ||
Balance at the end of the period | 2 | ||
Unrealized (Loss) Gain on Investment | ASU 2016-01 | |||
Accumulated Other Comprehensive Loss | |||
Adoption of ASU | (2) | ||
Accumulated Other Comprehensive Loss | |||
Accumulated Other Comprehensive Loss | |||
Balance at the beginning of the period | (1,013) | (1,071) | (1,102) |
Other comprehensive (loss) income before reclassification adjustments | (141) | 52 | (13) |
Amount reclassified from accumulated OCI | 6 | 4 | 50 |
Tax (provision) benefit | 1 | 2 | (6) |
Net other comprehensive (loss) income | (134) | 58 | 31 |
Other | (7) | ||
Balance at the end of the period | (1,154) | $ (1,013) | $ (1,071) |
Accumulated Other Comprehensive Loss | ASU 2016-01 | |||
Accumulated Other Comprehensive Loss | |||
Adoption of ASU | (2) | ||
Accumulated Other Comprehensive Loss | ASU 2018-02 | |||
Accumulated Other Comprehensive Loss | |||
Adoption of ASU | $ (5) |
Equity - Reclassifications from
Equity - Reclassifications from AOCI (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Amount Reclassified from Accumulated Other Comprehensive Income | |||||||||||
Cost of sales | $ (4,473) | $ (4,360) | $ (4,303) | ||||||||
Net sales | $ 1,426 | $ 1,450 | $ 1,496 | $ 1,469 | $ 1,437 | $ 1,485 | $ 1,457 | $ 1,453 | 5,841 | 5,832 | 5,704 |
Financing costs, net | (86) | (73) | (66) | ||||||||
Income before income taxes | 621 | 769 | 742 | ||||||||
Tax benefit | (167) | (237) | (246) | ||||||||
Net income attributable to Ingredion | $ 94 | $ 95 | $ 114 | $ 140 | $ 99 | $ 166 | $ 130 | $ 124 | 443 | 519 | 485 |
Reclassification out of Accumulated Other Comprehensive Income | |||||||||||
Amount Reclassified from Accumulated Other Comprehensive Income | |||||||||||
Income before income taxes | (6) | (4) | (50) | ||||||||
Tax benefit | 2 | 1 | 16 | ||||||||
Net income attributable to Ingredion | (4) | (3) | (34) | ||||||||
Deferred (Loss) Gain on Hedging Activities | Reclassification out of Accumulated Other Comprehensive Income | Commodity Contracts | |||||||||||
Amount Reclassified from Accumulated Other Comprehensive Income | |||||||||||
Cost of sales | (6) | (5) | (45) | ||||||||
Deferred (Loss) Gain on Hedging Activities | Reclassification out of Accumulated Other Comprehensive Income | Foreign Currency Contracts | |||||||||||
Amount Reclassified from Accumulated Other Comprehensive Income | |||||||||||
Net sales | 1 | 1 | (2) | ||||||||
Deferred (Loss) Gain on Hedging Activities | Reclassification out of Accumulated Other Comprehensive Income | Interest Rate Contract | |||||||||||
Amount Reclassified from Accumulated Other Comprehensive Income | |||||||||||
Financing costs, net | $ (1) | (2) | (2) | ||||||||
Pension and other postretirement plans | Reclassification out of Accumulated Other Comprehensive Income | |||||||||||
Amount Reclassified from Accumulated Other Comprehensive Income | |||||||||||
Cost of sales and operating expenses | $ 2 | $ (1) |
Equity - EPS (Details)
Equity - EPS (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Basic EPS: | |||||||||||
Net Income Available to Ingredion - basic | $ 443 | $ 519 | $ 485 | ||||||||
Weighted average number of shares outstanding, basic | 70.9 | 72 | 72.3 | ||||||||
Basic earnings per common share of Ingredion (in dollars per share) | $ 1.38 | $ 1.33 | $ 1.59 | $ 1.94 | $ 1.37 | $ 2.31 | $ 1.81 | $ 1.72 | $ 6.25 | $ 7.21 | $ 6.70 |
Effect of Dilutive Securities: | |||||||||||
Incremental shares from assumed exercise of dilutive stock options and vesting of dilutive RSUs and other awards | 0.9 | 1.5 | 1.8 | ||||||||
Diluted EPS: | |||||||||||
Net Income Available to Ingredion - diluted | $ 443 | $ 519 | $ 485 | ||||||||
Weighted Average Number of Shares Outstanding, Diluted, Total | 71.8 | 73.5 | 74.1 | ||||||||
Earnings Per Share, Diluted | $ 1.36 | $ 1.32 | $ 1.57 | $ 1.90 | $ 1.35 | $ 2.26 | $ 1.78 | $ 1.68 | $ 6.17 | $ 7.06 | $ 6.55 |
Segment Information - Net sales
Segment Information - Net sales, Operating income and Assets (Details) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2018USD ($)item | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | |
Segment information | |||||||||||
Number of reportable business segments | item | 4 | ||||||||||
Net sales before shipping and handling costs | $ 1,537 | $ 1,563 | $ 1,608 | $ 1,581 | $ 1,543 | $ 1,591 | $ 1,558 | $ 1,552 | $ 6,289 | $ 6,244 | $ 6,082 |
Less: Shipping and handling costs | 111 | 113 | 112 | 112 | 106 | 106 | 101 | 99 | 448 | 412 | 378 |
Net sales | 1,426 | 1,450 | 1,496 | 1,469 | 1,437 | 1,485 | 1,457 | 1,453 | 5,841 | 5,832 | 5,704 |
Operating income Subtotal | 767 | 878 | 828 | ||||||||
Restructuring/impairment charges | (64) | (38) | (19) | ||||||||
Acquisition / integration costs | (1) | (1) | (1) | (4) | (3) | ||||||
Charge for fair value markup of acquired inventory | (3) | (3) | (9) | ||||||||
Insurance settlement | 9 | ||||||||||
Total operating income | 703 | 836 | 806 | ||||||||
Financing costs, net | 86 | 73 | 66 | ||||||||
Other, non-operating income | (4) | (6) | (2) | ||||||||
Income before income taxes | 621 | 769 | 742 | ||||||||
Restructuring Charges | $ 16 | $ 27 | $ 5 | $ 3 | $ 10 | $ 5 | $ 5 | $ 11 | 64 | 38 | |
North America | |||||||||||
Segment information | |||||||||||
Net sales before shipping and handling costs | 3,857 | 3,843 | 3,734 | ||||||||
Less: Shipping and handling costs | 346 | 314 | 287 | ||||||||
Net sales | 3,511 | 3,529 | 3,447 | ||||||||
South America | |||||||||||
Segment information | |||||||||||
Net sales before shipping and handling costs | 988 | 1,052 | 1,054 | ||||||||
Less: Shipping and handling costs | 45 | 45 | 44 | ||||||||
Net sales | 943 | 1,007 | 1,010 | ||||||||
Asia Pacific | |||||||||||
Segment information | |||||||||||
Net sales before shipping and handling costs | 837 | 772 | 738 | ||||||||
Less: Shipping and handling costs | 34 | 32 | 29 | ||||||||
Net sales | 803 | 740 | 709 | ||||||||
EMEA | |||||||||||
Segment information | |||||||||||
Net sales before shipping and handling costs | 607 | 577 | 556 | ||||||||
Less: Shipping and handling costs | 23 | 21 | 18 | ||||||||
Net sales | 584 | 556 | 538 | ||||||||
Operating Segments | North America | |||||||||||
Segment information | |||||||||||
Operating income Subtotal | 545 | 654 | 606 | ||||||||
Operating Segments | South America | |||||||||||
Segment information | |||||||||||
Operating income Subtotal | 99 | 81 | 90 | ||||||||
Operating Segments | Asia Pacific | |||||||||||
Segment information | |||||||||||
Operating income Subtotal | 104 | 115 | 113 | ||||||||
Operating Segments | EMEA | |||||||||||
Segment information | |||||||||||
Operating income Subtotal | 116 | 114 | 107 | ||||||||
Corporate, Non -Segment | |||||||||||
Segment information | |||||||||||
Operating income Subtotal | $ (97) | $ (86) | $ (88) |
Segment Information - Restructu
Segment Information - Restructuring charges (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment information | |||||||||||
Restructuring charges | $ 16 | $ 27 | $ 5 | $ 3 | $ 10 | $ 5 | $ 5 | $ 11 | $ 64 | $ 38 | |
Cost Smart Cost of Sales Program | |||||||||||
Segment information | |||||||||||
Restructuring charges | 49 | ||||||||||
Cost Smart Cost of Sales Program | Employee-related severance costs | |||||||||||
Segment information | |||||||||||
Restructuring charges | 3 | ||||||||||
Cost Smart SG&A Program | |||||||||||
Segment information | |||||||||||
Restructuring charges | 11 | ||||||||||
Argentina organizational restructuring effort | Employee-related severance and other costs | |||||||||||
Segment information | |||||||||||
Restructuring charges | 17 | ||||||||||
Brazil leaf extraction Process restructuring | |||||||||||
Segment information | |||||||||||
Restructuring charges | 1 | 13 | |||||||||
Finance Transformation Initiative | |||||||||||
Segment information | |||||||||||
Restructuring charges | $ 3 | ||||||||||
Finance Transformation Initiative | Employee-related severance and other costs | |||||||||||
Segment information | |||||||||||
Restructuring charges | 6 | ||||||||||
North America restructuring plans and prior year restructuring activities | Employee-related severance, other costs and adjustments | |||||||||||
Segment information | |||||||||||
Restructuring charges | 2 | ||||||||||
IT transformation | Employee-related severance and other costs | |||||||||||
Segment information | |||||||||||
Restructuring charges | $ 11 | ||||||||||
Optimization Initiative Of North And South America | Employee-related severance costs | |||||||||||
Segment information | |||||||||||
Restructuring charges | 6 | ||||||||||
Optimization Initiative Of North And South America | Employee-related severance and other costs | |||||||||||
Segment information | |||||||||||
Restructuring charges | $ 6 | ||||||||||
Port Colborne Ontario Canada Plant | Facility closure costs | |||||||||||
Segment information | |||||||||||
Restructuring charges | $ 2 |
Segment Information - Assets, d
Segment Information - Assets, depreciation, store expense and capital expenditure (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment information | |||
Total assets | $ 5,728 | $ 6,080 | |
Depreciation and amortization | 247 | 209 | $ 196 |
Mechanical stores expense | 57 | 57 | 57 |
Capital expenditures and mechanical stores purchases | 350 | 314 | 284 |
North America | |||
Segment information | |||
Total assets | 3,737 | 3,967 | |
Depreciation and amortization | 180 | 140 | 130 |
Mechanical stores expense | 38 | 37 | 37 |
Capital expenditures and mechanical stores purchases | 232 | 180 | 167 |
South America | |||
Segment information | |||
Total assets | 711 | 812 | |
Depreciation and amortization | 24 | 27 | 26 |
Mechanical stores expense | 11 | 12 | 12 |
Capital expenditures and mechanical stores purchases | 61 | 50 | 56 |
Asia Pacific | |||
Segment information | |||
Total assets | 792 | 774 | |
Depreciation and amortization | 27 | 25 | 23 |
Mechanical stores expense | 5 | 5 | 5 |
Capital expenditures and mechanical stores purchases | 39 | 51 | 41 |
EMEA | |||
Segment information | |||
Total assets | 488 | 527 | |
Depreciation and amortization | 16 | 17 | 17 |
Mechanical stores expense | 3 | 3 | 3 |
Capital expenditures and mechanical stores purchases | $ 18 | $ 33 | $ 20 |
Segment Information - Sales and
Segment Information - Sales and long-lived assets (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Segment information | |||||||||||
Net sales | $ 1,426 | $ 1,450 | $ 1,496 | $ 1,469 | $ 1,437 | $ 1,485 | $ 1,457 | $ 1,453 | $ 5,841 | $ 5,832 | $ 5,704 |
Long-lived assets | 2,329 | 2,360 | 2,329 | 2,360 | |||||||
US | |||||||||||
Segment information | |||||||||||
Net sales | 2,133 | 2,191 | 2,117 | ||||||||
Long-lived assets | 1,004 | 977 | 1,004 | 977 | |||||||
Mexico | |||||||||||
Segment information | |||||||||||
Net sales | 997 | 952 | 955 | ||||||||
Long-lived assets | 318 | 306 | 318 | 306 | |||||||
Brazil | |||||||||||
Segment information | |||||||||||
Net sales | 462 | 519 | 522 | ||||||||
Long-lived assets | 207 | 235 | 207 | 235 | |||||||
Canada | |||||||||||
Segment information | |||||||||||
Net sales | 381 | 385 | 375 | ||||||||
Long-lived assets | 165 | 179 | 165 | 179 | |||||||
Thailand | |||||||||||
Segment information | |||||||||||
Long-lived assets | 137 | 137 | 137 | 137 | |||||||
Germany | |||||||||||
Segment information | |||||||||||
Long-lived assets | 129 | 133 | 129 | 133 | |||||||
Korea | |||||||||||
Segment information | |||||||||||
Net sales | 286 | 275 | 266 | ||||||||
Long-lived assets | 110 | 109 | 110 | 109 | |||||||
Other countries | |||||||||||
Segment information | |||||||||||
Net sales | 1,582 | 1,510 | $ 1,469 | ||||||||
Long-lived assets | $ 259 | $ 284 | $ 259 | $ 284 |
Quarterly Financial Data (Una_3
Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | |
Quarterly Financial Data (Unaudited) | |||||||||||
Net sales before shipping and handling costs | $ 1,537 | $ 1,563 | $ 1,608 | $ 1,581 | $ 1,543 | $ 1,591 | $ 1,558 | $ 1,552 | $ 6,289 | $ 6,244 | $ 6,082 |
Less: Shipping and handling costs | 111 | 113 | 112 | 112 | 106 | 106 | 101 | 99 | 448 | 412 | 378 |
Net sales | 1,426 | 1,450 | 1,496 | 1,469 | 1,437 | 1,485 | 1,457 | 1,453 | 5,841 | 5,832 | 5,704 |
Gross profit | 320 | 334 | 360 | 354 | 360 | 388 | 373 | 351 | 1,368 | 1,472 | 1,401 |
Net income attributable to Ingredion | $ 94 | $ 95 | $ 114 | $ 140 | $ 99 | $ 166 | $ 130 | $ 124 | $ 443 | $ 519 | $ 485 |
Basic earnings per common share of Ingredion (in dollars per share) | $ 1.38 | $ 1.33 | $ 1.59 | $ 1.94 | $ 1.37 | $ 2.31 | $ 1.81 | $ 1.72 | $ 6.25 | $ 7.21 | $ 6.70 |
Diluted earnings per common share of Ingredion (in dollars per share) | 1.36 | 1.32 | 1.57 | 1.90 | 1.35 | 2.26 | 1.78 | 1.68 | $ 6.17 | $ 7.06 | $ 6.55 |
Per share dividends declared | $ 0.625 | $ 0.625 | $ 0.60 | $ 0.60 | $ 0.60 | $ 0.60 | $ 0.50 | $ 0.50 | |||
Restructuring charges | $ 16 | $ 27 | $ 5 | $ 3 | $ 10 | $ 5 | $ 5 | $ 11 | $ 64 | $ 38 | |
Charge for fair value markup of acquired inventory | $ 3 | 3 | 9 | ||||||||
Pre-tax acquisition and integration costs | 1 | 1 | $ 1 | 4 | $ 3 | ||||||
(Gain) loss on income tax settlement | 2 | $ 2 | $ 10 | ||||||||
After-tax gain on insurance settlement | 6 | ||||||||||
TCJA provisional tax benefit | $ 1 | $ 2 | $ 23 | $ 23 |