INGREDION INCORPORATED Unless the context indicates otherwise, references to "we," "us," "our," the
"Company" and "Ingredion" mean
Overview We are a major supplier of high-quality food and industrial ingredient solutions to customers around the world. As ofSeptember 30, 2020 , we have 46 manufacturing plants located inNorth America ,South America ,Asia-Pacific andEurope , theMiddle East andAfrica ("EMEA"), and we manage and operate our businesses at a regional level. We believe this approach provides us with a unique understanding of the cultures and product requirements in each of the geographic markets in which we operate, bringing added value to our customers. Our ingredients are used by customers in the food, beverage, brewing, and animal nutrition industries, among others. Our strategic growth roadmap is based on five growth platforms and is designed to deliver shareholder value by accelerating customer co-creation and enabling consumer-preferred innovation. Our first platform is starch-based texturizers, the second platform is clean and simple ingredients, the third platform is plant-based proteins, the fourth platform is sugar reduction and specialty sweeteners, and finally, our fifth platform is value-added food systems. For the three and nine months endedSeptember 30, 2020 , operating income, net income and diluted earnings per share decreased from the comparable 2019 period. The decreases for the respective periods were attributable primarily to reductions in volumes driven by government mandated shutdowns associated with coronavirus 19 ("COVID-19"), particularly in theAmericas , increased restructuring/impairment costs primarily associated with our Cost Smart program, and the results of the acquired operations of PureCircle. COVID-19: Our operations in recent periods have been adversely affected by impacts of COVID-19. OnMarch 11, 2020 , theWorld Health Organization declared COVID-19 a pandemic, and onMarch 13, 2020 the United States declared a national emergency with respect to COVID-19. Our global operations expose us to risks associated with public health crises, including pandemics such as COVID-19. Foreign governmental organizations and governmental organizations at the national, state and local levels inthe United States have taken various actions to combat the spread of COVID-19, including imposing stay-at-home orders and closing "non-essential" businesses and their operations. As a manufacturer of food ingredients, our operations are considered "essential" under most current COVID-19 government regulations, and our facilities are operating globally. We did not experience any material supply chain interruptions during the three months endedSeptember 30, 2020 , and were able to continue to operate and ship products from our global network of plants. We place top priority on our employees' health and safety and continue to follow the advice and the guidelines of public health authorities for physical distancing and to make available personal protective equipment and sanitization supplies. The Company anticipates continued impacts from COVID-19 on net sales volume across our operating segments in the fourth quarter, with recovery in net sales generally correlated with increased consumer activity. With pandemic case rates rising and falling across many geographies, we expect away-from-home consumption to continue to fluctuate, suppressing volume demand for ingredients that are formulated in food and beverages consumed away-from-home. We anticipate modestly higher demand for food consumed in home, increasing volumes for ingredients that are part of the recipes for these meals. Restructuring and Impairment Costs: For the three and nine months endedSeptember 30, 2020 , we recorded a total of$16 million and$41 million of pre-tax restructuring and impairment charges, respectively. For the three and nine months endedSeptember 30, 2020 , we recorded$2 million and$17 million , respectively, of pre-tax restructuring charges for our Cost Smart cost of sales program. During the three months endedSeptember 30, 2020 , we recorded$1 million of other restructuring costs in relation to the closure of the Lane Cove,Australia production facility and$1 million of other costs related to the closure of theStockton, California production facility. During the nine months endedSeptember 30, 2020 , we recorded$10 million of restructuring charges in relation to the closure of the Lane Cove,Australia production facility,$6 million related to the closure of theStockton, California production facility and$1 million of other restructuring costs. The Lane Cove,Australia restructuring costs consist of$6 million of asset write-offs,$3 million of other costs, and$1 million of accelerated depreciation. TheStockton, California restructuring costs consist of$4 million of accelerated 28
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depreciation,$1 million of employee-related severance, and$1 million of other costs. We expect to incur$1 million of additional restructuring costs during the remainder of 2020 related to the Lane Cove production facility closure. Additionally, we recorded pre-tax restructuring charges of$4 million and$14 million during the three and nine months endedSeptember 30, 2020 , respectively, for our Cost Smart selling, general and administrative expense ("SG&A") program. During the three months endedSeptember 30, 2020 , we recorded$4 million of pre-tax restructuring charges, consisting primarily of other costs, including professional services, inNorth America . During the nine months endedSeptember 30, 2020 , we recorded pre-tax restructuring costs of$14 million primarily inNorth America , consisting of$12 million of other costs, including professional services, and$2 million of employee-related severance. We also recognized an other-than-temporary impairment of$10 million on our equity method investment inVerdient Foods Inc. during the three months endedSeptember 30, 2020 . The other-than-temporary impairment was triggered by the decrease in the fair value of our investment, determined by the agreed upon price for our acquisition of the remaining 80% interest inVerdient Foods Inc. Storm Damage Costs: During the three and nine months endedSeptember 30, 2020 ,
we incurred storm damage to theCedar Rapids, Iowa manufacturing facility. The facility was shut down for 10 days, and the storm related damage resulted in$2 million of charges during the three months endedSeptember 30, 2020 . We recorded the storm damage costs within Other expense (income), net on the Condensed Consolidated Statements of Income included in this report. Liquidity and Capital Resources: Our cash provided by operating activities increased to$562 million for the nine months endedSeptember 30, 2020 , from$490 million in the prior year, driven by our changes in working capital, partially offset by lower net income. Our cash provided by financing activities was$202 million during the nine months endedSeptember 30, 2020 , compared to cash used by financing activities of$86 million in the prior year. This increase was mainly driven by higher net borrowings during the period, including our issuance and sale of$1.0 billion of senior notes. The impact of these factors was partially offset by payments on outstanding debt, including payment in full of$394 million of borrowings under our Revolving Credit Facility and early redemption of$400 million of our 4.625% senior notes dueNovember 1 ,
2020. Results of Operations We have significant operations in four reporting segments:North America ,South America ,Asia-Pacific and EMEA. For most of our foreign subsidiaries, the local foreign currency is the functional currency. Accordingly, revenues and expenses denominated in the functional currencies of these subsidiaries are translated intoU.S. dollars at the applicable average exchange rates for the period. Fluctuations in foreign currency exchange rates affect theU.S. dollar amounts of our foreign subsidiaries' revenues and expenses. The impact of foreign currency translation to the reporting currency, where significant, is provided below.
We acquired PureCircle Limited ("PureCircle") on July 1, 2020 and acquired
Western Polymer LLC ("Western Polymer") on March 1, 2019 . The results of the
acquired businesses are included in our consolidated financial results from the
respective acquisition dates and affect the comparability of our results of
operations discussed below.
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For the Three Months Ended September 30, 2020
With Comparatives for the Three Months Ended September 30, 2019
Favorable Favorable
Three Months Ended September 30, (Unfavorable) (Unfavorable)
(in millions) 2020 2019 Variance Percentage
Net sales $ 1,502 $ 1,574 $ (72) (5) %
Cost of sales 1,176 1,230 54 4 %
Gross profit 326 344 (18) (5) %
Operating expenses 155 153 (2) (1) %
Other expense (income), net 2 (2) (4) 200 %Restructuring/impairment charges 16
28 12 43 % Operating income 153 165 (12) (7) % Financing costs, net 22 24 2 8 % Other, non-operating expense/(income), net (2) 1 3 300 % Income before income taxes 133 140 (7) (5) % Provision for income taxes 40 38 (2) (5) % Net income 93 102 (9) (9) % Less: Net income attributable to non-controlling interests 1 3 2 67 % Net income attributable to Ingredion $ 92 $
99 $ (7) (7) %
Net income attributable to Ingredion. Net income attributable to Ingredion for the three months endedSeptember 30, 2020 decreased by 7 percent to$92 million from$99 million for the three months endedSeptember 30, 2019 . The decrease in net income was largely attributable to lower sales volumes inNorth America , the other-than temporary impairment of our equity method investment inVerdient Foods Inc. , and the inclusion of PureCircle's results. These were partly offset by reduced restructuring costs compared to the prior comparable period.
Net sales. Net sales were down
Cost of sales. Cost of sales for the three months endedSeptember 30, 2020 declined by$54 million or 4% compared to the three months endedSeptember 30, 2019 . Our gross profit margin remained flat at 22 percent for the three months endedSeptember 30, 2020 as compared to the three months endedSeptember 30, 2019 . Operating expenses. Our operating expenses increased 1 percent to$155 million for the three months endedSeptember 30, 2020 as compared to$153 million for the three months endedSeptember 30, 2019 . The increase was primarily driven by transaction costs associated with our acquisition and integration of PureCircle, which were partly offset by reduced travel costs and Cost Smart program savings.
Operating expenses, as a percentage of net sales, was 10 percent for the three
months ended
Financing costs, net. Financing costs for the three months ended
Provision for income taxes. Our effective tax rate for the three months endedSeptember 30, 2020 was 30.1 percent compared to 27.1 percent for the three months endedSeptember 30, 2019 . The increase in the effective income tax rate was driven by one-time items in the quarter over quarter results, a change in the mix of earnings including the consolidation of PureCircle, and a valuation allowance onU.S. foreign tax credits. These items were partially offset by a reduction in the Company'sU.S. global intangible low-taxed income ("GILTI") based on newly issued finalU.S. Treasury regulations relating thereto, an increase in the valuation of the Mexican peso against theU.S. dollar and utilization of net operating 30
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losses for which a benefit had not previously been recognized compared to a valuation allowance recorded in the 2019 period.
Segment ResultsNorth America Favorable Favorable Three Months Ended September 30, (Unfavorable) (Unfavorable) (in millions) 2020 2019 Variance Percentage
Net sales to unaffiliated customers $ 928 $
984 $ (56) (6) % Operating income 132 145 (13) (9) % Net sales. Our decrease in net sales of 6 percent for the three months endedSeptember 30, 2020 , as compared to the three months endedSeptember 30, 2019 , was driven by a 3 percent reduction in volume and 3 percent reduction in price mix.
Operating income. Our operating income decreased by
South America Favorable Favorable Three Months Ended September 30, (Unfavorable) (Unfavorable) (in millions) 2020 2019 Variance Percentage
Net sales to unaffiliated customers $ 224 $
245 $ (21) (9) % Operating income 29 27 2 7 %
Net sales. Our net sales decreased 9 percent for the three months ended
Operating income. Our increase in operating income of$2 million for the three months endedSeptember 30, 2020 , as compared to the three months endedSeptember 30, 2019 , was driven by strong price mix, which was partially offset by unfavorable foreign currency impacts and lower sales volumes.Asia-Pacific Favorable Favorable Three Months Ended September 30, (Unfavorable) (Unfavorable) (in millions) 2020 2019 Variance Percentage
Net sales to unaffiliated customers $ 207 $
205 $ 2 1 % Operating income 18 22 (4) (18) %
Net sales. Our net sales increased
The increase was primarily due to the inclusion of PureCircle results in the 2020 period, the effect of which was partly offset by unfavorable price mix.
Operating income. Our operating income decreased by
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EMEA
Favorable
Three Months Ended September 30, Favorable (Unfavorable) (Unfavorable)
(in millions) 2020 2019 Variance Percentage
Net sales to unaffiliated customers $ 143 $ 140 $ 3 2 % Operating income 25 24 1 4 %
Net sales. Our net sales increased by 2 percent for the three months ended
Operating income. Our operating income increased$1 million for the three months endedSeptember 30, 2020 , as compared to theSeptember 30, 2019 . The increase was largely attributable to favorable price mix inPakistan and lower operating expenses inEurope . For the Nine Months Ended September 30, 2020 With Comparatives for the Nine Months EndedSeptember 30, 2019 Favorable Favorable Nine Months Ended September 30, (Unfavorable) (Unfavorable) (in millions) 2020 2019 Variance Percentage Net sales $ 4,394 $ 4,660 $ (266) (6) % Cost of sales 3,474 3,671 197 5 % Gross profit 920 989 (69) (7) % Operating expenses 456 457 1 - % Other expense (income), net 4 (3) (7) (233) %
Restructuring/impairment charges 41
41 - - % Operating income 419 494 (75) (15) % Financing costs, net 59 62 3 5 % Other, non-operating expense/(income), net (3) 1 4 400 % Income before income taxes 363 431 (68) (16) % Provision for income taxes 125 120 (5) (4) % Net income 238 311 (73) (23) % Less: Net income attributable to non-controlling interests 5 7 2 29 % Net income attributable to Ingredion $ 233 $
304 $ (71) (23) %
Net income attributable to Ingredion. Net income attributable to Ingredion for the nine months endedSeptember 30, 2020 decreased by 23 percent to$233 million from$304 million for the nine months endedSeptember 30, 2019 . The decrease in net income was primarily due to decreases in volumes associated with the effects of COVID-19, unfavorable impacts of foreign exchange, the other-than temporary impairment of our equity method investment inVerdient Foods Inc. , and the inclusion of the results of PureCircle. These were partly offset by reduced restructuring costs compared to the prior comparable period.
Net sales. Net sales decreased by 6 percent for the nine months ended
Cost of sales. Cost of sales for the nine months endedSeptember 30, 2020 decreased by 5 percent as compared to the nine months endedSeptember 30, 2019 . Our gross profit margin remained flat at 21 percent for the nine months endedSeptember 30, 2020 as compared to the nine months endedSeptember 30, 2019 .
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Operating expenses. Our operating expenses remained flat for the nine months
ended September 30, 2020 as compared to the nine months ended
September 30, 2019 . Operating expenses, as a percentage of net sales, were 10
percent for the nine months ended September 30, 2020 and the nine months ended
September 30, 2019 .
Financing costs, net. Financing costs for the nine months ended
September 30, 2020 decreased to $59 million from $62 million for the nine months
ended September 30, 2019 primarily due to lower interest costs associated with
long-term debt, partially offset by foreign exchange impacts.
Provision for income taxes. Our effective tax rate for the nine months ended
September 30, 2020 was 34.4 percent compared to 27.8 percent for the nine months
ended September 30, 2019 . The increase in the effective tax rate was driven by a
decrease in the valuation of the Mexican peso against the U.S. dollar, one-time
items in the quarter over quarter results, a change in the mix of earnings
including the consolidation of PureCircle, and a valuation allowance on U.S.
foreign tax credits. These items were partially offset by a reduction in the
Company's GILTI based on newly issued final U.S. Treasury regulations relating
thereto and utilization of net operating losses for which a benefit had not
previously been recognized compared to a valuation allowance recorded in the
2019 period.
Segment Results
North America
Favorable Favorable
Nine Months Ended September 30, (Unfavorable) (Unfavorable)
(in millions) 2020 2019 Variance Percentage
Net sales to unaffiliated customers $ 2,739 $ 2,912 $ (173) (6) %
Operating income 358 409 (51) (12) %
Net sales. Our decrease in net sales of 6 percent for the nine months ended
Operating income. Our operating income decreased by$51 million to$358 million for the nine months endedSeptember 30, 2020 compared to$409 million for the nine months endedSeptember 30, 2019 . The decrease was driven by significantly lower away-from-home consumption across the region and the shutdown of brewery customers inMexico in the second quarter.South America Favorable Favorable Nine Months Ended September 30, (Unfavorable) (Unfavorable) (in millions) 2020 2019 Variance Percentage
Net sales to unaffiliated customers $ 643 $
699 $ (56) (8) % Operating income 68 61 7 11 % Net sales. Our net sales decreased 8 percent for the nine months endedSeptember 30, 2020 , as compared to the nine months endedSeptember 30, 2019 , primarily due to unfavorable foreign exchange impacts of 15 percent and a reduction in volume of 3 percent, partially offset by favorable price mix of 10 percent. Operating income. Our increase in operating income of$7 million for the nine months endedSeptember 30, 2020 , as compared to the nine months endedSeptember 30, 2019 , was due to strong price mix, partially offset by unfavorable foreign exchange impacts and lower sales volume.Asia-Pacific Favorable Favorable Nine Months Ended September 30, (Unfavorable) (Unfavorable) (in millions) 2020 2019 Variance Percentage
Net sales to unaffiliated customers $ 583 $
611 $ (28) (5) %
Operating income 60 65 (5) (8) %
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Net sales. Our net sales decreased 5 percent for the nine months ended
volume and price mix impacts of 2 percent each, the effects of which were partially offset by a 1 percent increase due to the inclusion of PureCircle results in the 2020 period.
Operating income. Our operating income decreased by
EMEA
Favorable Favorable
Nine Months Ended September 30, (Unfavorable) (Unfavorable)
(in millions) 2020 2019 Variance PercentageNet sales to unaffiliated customers $ 429 $
438 $ (9) (2) % Operating income 73 71 2 3 %
Net sales. Our net sales decreased 2 percent for the nine months ended
Operating income. Our operating income increased$2 million for the nine months endedSeptember 30, 2020 , as compared to the nine months endedSeptember 30, 2019 . The increase was largely attributable toPakistan pricing actions and solid EMEA specialty sales volume, and lower operating expense inEurope , partially offset by the impacts of stay-at-home orders onPakistan production and sales volume in the first half of the year, and by negative foreign currency impacts.
Liquidity and Capital Resources
Cash provided by operating activities for the nine months endedSeptember 30, 2020 was$562 million , as compared to$490 million for the nine months endedSeptember 30, 2019 . The increase in operating cash flow was primarily driven by our changes in working capital, partially offset by lower net income. Capital expenditures and mechanical stores purchases were$250 million for the nine months endedSeptember 30, 2020 .
As of
(in millions) 2.900% senior notes dueJune 1, 2030 $
594
3.200% senior notes dueOctober 1, 2026
497
3.900% senior notes dueJune 1, 2050
390
6.625% senior notes dueApril 15, 2037
253
Term loan credit agreement dueApril 12, 2021
380 Revolving credit facility - Other long-term borrowings 1
Fair value adjustment related to hedged fixed rate debt instruments
- Long-term debt 2,115 Short-term borrowings 62 Total debt$ 2,177
During the three months ended
During the three months endedJune 30, 2020 , we sold our (i) 2.900% senior notes due 2030 in the principal amount of$600 million (the "2030 Notes") and (ii) 3.900% senior notes due 2050 in the principal amount of$400 million (the "2050 Notes" and, together with the "2030 Notes," the "Notes"). We recorded the aggregate discount of approximately$7 million at which the Notes were issued and capitalized debt issuance costs of approximately$9 million associated
with
the Notes.
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During the three months ended June 30, 2020 , we applied the net proceeds from
the sale of the Notes to pay in full the outstanding balance of $394 million
under the Revolving Credit Facility and to set aside funds to repay our 4.625%
senior notes due November 1, 2020 (the "2020 Notes"). On June 8, 2020 , we
issued a notice for the redemption in full of the $400 million principal amount
of the 2020 Notes. The 2020 Notes were redeemed on July 9, 2020 for a total
redemption price of $409 million , including $4 million of accrued interest and a
$5 million "make-whole" premium as set forth in the indenture. These costs are
recorded in Financing Costs, net in the Condensed Consolidated Statements of
Income included in this report.
The Company's long-term debt as of September 30, 2020 , includes the term loan
credit agreement due April 12, 2021 , as the Company has the ability and intent
to refinance it on a long-term basis using our Revolving Credit Facility or
other means prior to the maturity date.
As of September 30, 2020 , in addition to the approximately $1.0 billion of
borrowings availability under the Revolving Credit Facility, we have
approximately $723 million of unused operating lines of credit in the various
foreign countries in which we operate. We are required under our credit
facilities not to exceed a maximum leverage ratio and to maintain a minimum
interest coverage ratio. As of September 30, 2020 , we were in compliance with
both of these financial covenants.
The weighted average interest rate on our total indebtedness was approximately
3.4 percent for the nine months ended
OnSeptember 16, 2020 , our Board of Directors declared a quarterly cash dividend of$0.64 per share of common stock. This dividend was paid onOctober 26, 2020 , to stockholders of record at the close of business onOctober 1, 2020 . We have not provided foreign withholding taxes, state income taxes, and federal and state taxes or foreign currency gains/losses on accumulated undistributed earnings of certain foreign subsidiaries because these earnings are considered to be permanently reinvested. It is not practicable to determine the amount of the unrecognized deferred tax liability related to the undistributed earnings. We do not anticipate the need to repatriate funds to theU.S. to satisfy domestic liquidity needs arising in the ordinary course of business, including liquidity needs associated with our domestic debt service requirements. Approximately$349 million of the total$553 million of cash and cash equivalents and short-term investments atSeptember 30, 2020 was held by our operations outside of theU.S.
We expect that available cash balances and borrowings expected to be available under the Revolving Credit Facility, together with cash generated from operations and our access to debt markets, will be sufficient to meet our operating and other cash needs for at least the next twelve months.
Hedging and Financial Risk Hedging: We are 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, we actively manage our exposure to these market risks by entering into various hedging transactions, authorized under established policies that place controls on these activities. These transactions utilize exchange-traded derivatives or over-the-counter derivatives with investment grade counterparties. Our hedging transactions may include, but are not limited to, a variety of derivative financial instruments such as commodity-related futures, options and swap contracts, forward currency-related contracts and options, interest rate swap agreements, andTreasury lock agreements ("T-Locks"). See Note 6 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information. Commodity Price Risk: Our principal use of derivative financial instruments is to manage commodity price risk inNorth America relating to anticipated purchases of corn and natural gas to be used in our manufacturing process. We periodically enter into futures, options and swap contracts for a portion of our anticipated corn and natural gas usage, generally over the following 12 to 24 months, in order to hedge price risk associated with fluctuations in market prices. Unrealized gains and losses associated with marking our commodities-based cash flow hedge derivative instruments to market are recorded as a component of other comprehensive income ("OCI"). As ofSeptember 30, 2020 , our Accumulated other comprehensive loss account ("AOCI") included$2 million of net gains (net of an insignificant amount of taxes) related to these derivative instruments. It is anticipated that$1 million of net losses (net of an insignificant amount of taxes) will be reclassified into earnings during the next 12 months. We expect the net losses to be offset by lower underlying commodities costs. 35 Table of Contents Foreign-Currency Exchange Risk: Due to our global operations, including operations in many emerging markets, we are exposed to fluctuations in foreign-currency exchange rates. As a result, we have exposure to translational foreign-exchange risk when our foreign operations' results are translated toU.S. dollars and to transactional foreign-exchange risk when transactions not denominated in the functional currency of the operating unit are revalued intoU.S. dollars. We primarily use derivative financial instruments such as foreign-currency forward contracts, swaps and options to manage our foreign currency transactional exchange risk. We enter into foreign-currency derivative instruments that are designated as both cash flow hedging instruments as well as instruments not designated as hedging instruments as defined by Accounting Standards Codification 815, Derivatives and Hedging. As ofSeptember 30, 2020 , we had foreign currency derivatives not designated as hedging instruments hedging certain asset and liability positions with aggregate notional amounts of$648 million and$457 million , respectively. As ofSeptember 30, 2020 , we had foreign currency derivatives designated as cash flow hedging instruments hedging certain asset and liability positions with aggregate notional amounts of$495 million and$619 million , respectively. The amount included in AOCI relating to these hedges atSeptember 30, 2020 , was$3 million of net losses (net of income tax benefit of$1 million ). It is anticipated that$2 million of net losses (net of income tax benefit of$1 million ) will be reclassified into earnings during the next 12 months. Interest Rate Risk: We occasionally use interest rate swaps and T-Locks to hedge our exposure to interest rate changes, to reduce the volatility of our financing costs, or to achieve a desired proportion of fixed versus floating rate debt, based on current and projected market conditions. We did not have outstanding T-Locks as ofSeptember 30, 2020 . As ofSeptember 30, 2020 , AOCI included$4 million of net losses (net of an income tax benefit of$1 million ) related to previously settled T-Locks. Once T-Locks are settled, deferred losses are amortized to financing costs over the terms of the senior notes with which they are associated. It is anticipated that an insignificant amount of these net losses (net of an insignificant amount of taxes) will be reclassified into earnings during the next 12 months. As ofSeptember 30, 2020 , we did not have any interest rate swap agreements. As ofDecember 31, 2019 , we had an interest rate swap that effectively converted the interest rates on$200 million of our$400 million of 4.625% senior notes dueNovember 1, 2020 , to variable rates, which was paid inJuly 2020 . This swap agreement called for us to receive interest at the fixed coupon rate of the notes and to pay interest at a variable rate based on the six-monthU.S. dollar LIBOR plus a spread. As ofDecember 31, 2019 , we designated this interest rate swap agreement as a hedge of the changes in fair value of the underlying debt obligation attributable to changes in interest rates and accounted for it as a fair value hedge. The fair value of the interest rate swap agreement as ofDecember 31, 2019 was a$1 million loss, and is reflected in the Condensed Consolidated Balance Sheets included in this report within Other assets, with an offsetting amount recorded in Long-term debt to adjust the carrying amount of the hedged debt obligations.
Critical Accounting Policies and Estimates
Our critical accounting policies and estimates are described in Management's Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year endedDecember 31, 2019 . See Note 2 of the Notes to the Condensed Consolidated Financial Statements included in this report for additional information regarding our significant accounting policies. There have been no other changes to our critical accounting policies and estimates during the nine months endedSeptember 30, 2020 . 36 Table of Contents FORWARD-LOOKING STATEMENTS
This Form 10-Q contains or may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends these forward-looking statements to be covered by the safe harbor provisions for such statements.
Forward-looking statements include, among other things, any statements regarding the Company's future financial condition, earnings, revenues, tax rates, capital expenditures, cash flows, expenses or other financial items, any statements concerning the Company's prospects or future operations, including management's plans or strategies and objectives therefor, and any assumptions, expectations or beliefs underlying the foregoing. These statements can sometimes be identified by the use of forward-looking words such as "may," "will," "should," "anticipate," "assume," "believe," "plan," "project," "estimate," "expect," "intend," "continue," "pro forma," "forecast," "outlook," "propels," "opportunities," "potential," "provisional," or other similar expressions or the negative thereof. All statements other than statements of historical facts in this report or referred to in this report are "forward-looking statements." These statements are based on current circumstances or expectations, but are subject to certain inherent risks and uncertainties, many of which are difficult to predict and are beyond our control. Although we believe our expectations reflected in these forward-looking statements are based on reasonable assumptions, investors are cautioned that no assurance can be given that our expectations will prove correct. Actual results and developments may differ materially from the expectations expressed in or implied by these statements as a result of the following risks and uncertainties, among others: changing consumption preferences and perceptions, including those relating to high fructose corn syrup; the effects of global economic conditions and the general political, economic, business, market conditions that affect customers and consumers in the various geographic regions and countries in which we buy our raw materials or manufacture or sell our products, including, particularly, economic, currency and political conditions inSouth America and economic and political conditions inEurope , and the impact these factors may have on our sales volumes, the pricing of our products, our access to credit markets and our ability to collect our receivables from customers; adverse changes in investment returns earned on our pension assets; future financial performance of major industries which we serve and from which we derive a significant portion of our sales, including the food, beverage, animal nutrition, and brewing industries; the uncertainty of acceptance of products developed through genetic modification and biotechnology; our ability to develop or acquire new products and services at rates or of qualities sufficient to meet expectations; changes inU.S. and foreign government policy, laws or regulations and costs of legal compliance; increased competitive and/or customer pressure in the corn-refining industry and related industries, including with respect to the markets and prices for our primary products and our co-products, particularly corn oil; the availability of raw materials, including potato starch, tapioca, gum Arabic and the specific varieties of corn upon which some of our products are based, and our ability to pass on potential increases in the cost of corn or other raw materials to customers; raw material and energy costs and availability; our ability to contain costs, achieve budgets and realize expected synergies, including with respect to our ability to complete planned maintenance and investment projects on time and on budget, and to achieve expected savings under our Cost Smart program as well as with respect to freight and shipping costs; the impact of financial and capital markets on our borrowing costs, including as a result of foreign currency fluctuations, fluctuations in interest and exchange rates and market volatility and the associated risks of hedging against such fluctuations; the potential effects of climate change; our ability to successfully identify and complete acquisitions or strategic alliances on favorable terms as well as our ability to successfully integrate acquired businesses or implement and maintain strategic alliances and achieve anticipated synergies with respect to all of the foregoing; operating difficulties at our manufacturing plants or with respect to boiler reliability; risks related to product safety and quality and compliance with environmental, health and safety, and food safety laws and regulations; economic, political and other risks inherent in operating in foreign countries with foreign currencies and shipping products between countries, including with respect to tariffs, quotas and duties; interruptions, security breaches or failures that might affect our information technology systems, processes and sites; our ability to maintain satisfactory labor relations; the impact that weather, natural disasters, war or similar acts of hostility, acts and threats of terrorism, the outbreak or continuation of pandemics such as COVID 19 and other significant events could have on our business; the potential recognition of impairment charges on goodwill or long lived assets; changes in our tax rates or exposure to additional income tax liabilities; and our ability to raise funds at reasonable rates to grow and
expand our operations.
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Our forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of the statement as a result of new information or future events or developments. If we do update or correct one or more of these statements, investors and others should not conclude that we will make additional updates or corrections. For a further description of these and other risks, see "Risk Factors" and other information included in our Annual Report on Form 10-K for the year endedDecember 31, 2019 , in our Quarterly Report on Form 10-Q for the quarterly period endedMarch 31, 2020 , and in our subsequent reports on Forms 10-Q and 8-K.
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