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Restructuring and Impairment Charges | 3 Months Ended
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Mar. 31, 2021
Restructuring and Impairment Charges |
Restructuring and Impairment Charges | ​ 5. Restructuring and Impairment Charges ​ For the three months ended March 31, 2021, the Company recorded $370 million of pre-tax impairment and restructuring charges. These charges included impairment charges of $360 million related to held for sale treatment of net assets expected to be contributed to an unconsolidated joint venture in the third quarter of 2021, as described below, and pre-tax restructuring charges of $10 million primarily related to the Company’s Cost Smart program. ​ For the three months ended March 31, 2020, the Company recorded $14 million of pre-tax restructuring and impairment charges. These charges included $9 million of pre-tax restructuring and impairment charges for the Company’s Cost Smart Cost of sales program, and $5 million of pre-tax restructuring and impairment charges for the Company’s Cost Smart selling, general, and administrative expense (“SG&A”) program. ​ Impairment Charges ​ On February 12, 2021, the Company signed an agreement with an affiliate of Grupo Arcor, an Argentine food company, to establish a joint venture to combine manufacturing operations in Argentina in order to sell value-added ingredients to customers in Argentina, Chile and Uruguay. The joint venture will be 51% owned by Grupo Arcor and 49% owned by Ingredion. The joint venture will operate five manufacturing facilities that produce value-added ingredients including glucose syrups, maltose, fructose, starch, and maltodextrins, among others, that are marketed to the food, beverage, pharmaceutical and other industries. The joint venture will be managed by a jointly-appointed team of executives. Subject to the satisfaction of regulatory approvals and other closing conditions, the joint venture transaction is expected to close in the third quarter of 2021. ​ In connection with its entry into the joint venture agreement, the Company has classified the assets and liabilities to be transferred to the joint venture as held for sale in its Condensed Consolidated Financial Statements during the three months ended March 31, 2021. Accordingly, the Company recorded those assets and liabilities at fair value, less estimated transaction costs, resulting in an impairment charge of $360 million, of which $311 million was related to the required valuation allowance of the cumulative translation losses associated with the contributed net assets and $49 million was related to the write-down of the contributed net assets to the agreed upon fair value. The non-cash impairment charge is subject to finalization based on ending balances and foreign exchange impacts until the transaction closes. The Company recorded the impairment within Restructuring/impairment charges in the Condensed Consolidated Statements of (Loss) Income for the three months ended March 31, 2021. The held for sale assets and liabilities were classified within the Company’s South America reportable business segment. ​ The following table presents the major classes of assets and liabilities classified as held for sale for the joint venture agreement. Assets classified as held for sale are included in Other assets and liabilities held for sale are included in Liabilities held for sale on the Condensed Consolidated Balance Sheets as of March 31, 2021. ​
​ | ​ | ​ | ​ | ​
​ | ​ | ​ | ​
(in millions) | ​ | March 31, 2021 | ​
Cash and cash equivalents |  | $ | 2 | ​
Accounts receivable, net | ​ | ​ | 36 | ​
Inventories | ​ | ​ | 26 | ​
Prepaid expenses | ​ | ​ | 1 | ​
Property, plant and equipment, net | ​ | ​ | 57 | ​
Other assets | ​ | ​ | 1 | ​
Impairment provision to record at fair value, less cost to sell | ​ | ​ | (49) | ​
Assets held for sale | ​ | $ | 74 | ​
​ | ​ | ​ | ​ | ​
Accounts payable | ​ | $ | 22 | ​
Accrued liabilities | ​ | ​ | 4 | ​
Impairment provision related to cumulative translation losses | ​ | ​ | 311 | ​
Liabilities held for sale | ​ | $ | 337 | ​
​ | ​ | ​ | ​ | ​
​ During the year ended December 31, 2020, the Company identified property, plant and equipment assets within the Stockton, California and Lane Cove, Australia locations that met the held for sale criteria. The Company expects to sell these assets at a fair value equal to or greater than the carrying value and did not record a gain or loss associated with the reclassification of these assets to held for sale. The value of these assets as of March 31, 2021 is $8 million. The assets are reported within Other assets on the Condensed Consolidated Balance Sheets. A total of $82 million of assets held for sale, including the held for sale assets described above, were reported within Other assets as of March 31, 2021. During April 2021, the Company completed the sale of the property, plant and equipment held for sale at the Stockton, California location and sold the assets for more than the carrying value. ​ Restructuring Charges ​ For the three months ended March 31, 2021, the Company recorded a total of $10 million of pre-tax restructuring charges. The Company recorded pre-tax restructuring charges of $5 million for its Cost Smart SG&A program. These costs consist primarily of other costs, including professional services costs. ​ The Company also recorded $3 million of pre-tax restructuring charges for its Cost Smart Cost of sales program for the three months ended March 31, 2021. These costs were primarily in the Company’s North America segment, of which $2 million related to the reorganization of North America’s supply chain. ​ For the three months ended March 31, 2021, the Company also recorded $2 million of pre-tax restructuring charges, consisting of $1 million of employee severance and $1 million of other costs, related to the planned joint venture transaction. ​ For the three months ended March 31, 2020, the Company recorded a total of $14 million of pre-tax restructuring and impairment charges. The Company recorded $9 million of pre-tax restructuring charges related to its Cost Smart Cost of sales program. The Company recorded $5 million of pre-tax restructuring charges in relation to the closure of the Lane Cove, Australia production facility, consisting of $3 million of asset write-offs, $1 million of accelerated depreciation, and $1 million of other costs. The Company also recorded an additional $4 million of pre-tax restructuring charges, primarily in North America, during the three months ended March 31, 2020. These costs included $3 million of accelerated depreciation and $1 million of professional services. ​ For the three months ended March 31, 2020, the Company also recorded pre-tax restructuring charges of $5 million for its Cost Smart SG&A program. These costs included $3 million of other costs, including professional services, and $2 million of severance. These charges were recorded primarily in the Company’s North America operations. ​ A summary of the Company’s employee-related severance accrual as of March 31, 2021 is as follows (in millions): ​
​ | ​ | ​ | ​ | ​
Balance in severance accrual as of December 31, 2020 |  | $ | 12 | ​
Joint venture related | ​ | ​ | 1 | ​
Payments made to terminated employees | ​ | ​ | (4) | ​
Balance in severance accrual as of March 31, 2021 |  | $ | 9 | ​
​ The entire $9 million severance accrual as of March 31, 2021 is expected to be paid in the next 12 months.

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- Definition The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 420 -URI http://asc.fasb.org/topic&trid=2175745 + Details
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