UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q/A
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
FOR THE QUARTER ENDED JUNE 30, 2001
COMMISSION FILE NUMBER 1-13397
CORN PRODUCTS INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
22-3514823
(I.R.S. Employer Identification Number)
6500 SOUTH ARCHER AVENUE,
BEDFORD PARK, ILLINOIS 60501-1933
(Address of principal executive offices) (Zip Code)
(708) 563-2400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
filing requirements for the past 90 days:
Yes X No
--- ---
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT JULY 31, 2001
Common Stock, $.01 par value 35,305,359 shares
PART I FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS EXCEPT PER SHARE AMOUNTS)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------- --------------------
2001 2000 2001 2000
-------- ---------- -------- --------
Net sales $ 482.2 $ 473.9 $ 936.7 $ 918.1
Cost of sales 409.7 389.2 789.2 755.5
-------- -------- -------- --------
Gross profit 72.5 84.7 147.5 162.6
Operating expenses 35.1 34.5 74.5 71.0
Special charges -- -- -- 20.0
Fees and income from non--consolidated
affiliates (4.8) (0.7) (8.8) (2.1)
-------- -------- -------- --------
Operating income 42.2 50.9 81.8 73.7
Financing costs 15.0 12.3 30.6 22.7
-------- -------- -------- --------
Income before taxes 27.2 38.6 51.2 51.0
Provision for income taxes 9.5 13.5 17.9 17.8
-------- -------- -------- --------
17.7 25.1 33.3 33.2
Minority interest in earnings 2.4 5.8 5.4 10.3
-------- -------- -------- --------
Net income 15.3 19.3 27.9 22.9
======== ======== ======== ========
Average common shares outstanding:
Basic 35.3 35.2 35.3 35.3
Diluted 35.4 35.2 35.4 35.3
Net income per common share:
Basic $ 0.43 $ 0.55 $ 0.79 $ 0.65
Diluted $ 0.43 $ 0.55 $ 0.79 $ 0.65
See Notes To Condensed Consolidated Financial Statements
10Q-2
PART I FINANCIAL INFORMATION
ITEM I
FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF:
(IN MILLIONS EXCEPT SHARE AND PER SHARE AMOUNTS) JUNE 30, DECEMBER 31,
2001 2000
--------- -----------
ASSETS
Current Assets
Cash and cash equivalents $ 27 $ 41
Accounts receivable - net 301 274
Inventories 211 232
Prepaid expenses 15 8
----------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 554 555
----------------------------------------------------------------------------------------------------------
Plants and properties - net 1,368 1,407
Goodwill, net of accumulated amortization 314 313
Deferred tax asset 2 2
Investments 35 28
Other assets 38 34
----------------------------------------------------------------------------------------------------------
TOTAL ASSETS 2,311 2,339
==========================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term borrowings and current portion of long-term debt 230 267
Accounts payable and accrued liabilities 208 219
----------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 438 486
----------------------------------------------------------------------------------------------------------
Non-current liabilities 45 47
Long-term debt 586 453
Deferred tax liability 170 185
Minority interest in subsidiaries 152 208
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 - 37,659,887 issued
on June 30, 2001 and December 31, 2000 1 1
Additional paid in capital 1,073 1,073
Less: Treasury stock (common stock; 2,353,528 and 2,391,913 shares at
June 30, 2001 and December 31, 2000, respectively) at cost (59) (60)
Deferred compensation - restricted stock (3) (3)
Accumulated comprehensive loss (244) (183)
Retained earnings 152 132
----------------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 920 960
----------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,311 $ 2,339
==========================================================================================================
See Notes To Condensed Consolidated Financial Statements
10Q-3
PART I FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(IN MILLIONS) THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ----------------
2001 2000 2001 2000
-------- ------- ------- -------
Net Income $ 15 $ 19 $ 28 $ 23
Comprehensive income/loss:
Gain (loss) on cash flow hedges:
Cumulative effect of adoption of SFAS 133,
net of tax -- -- 14 --
Current period gain (loss) on cash flow
hedges, net of tax (15) -- (40) --
Currency translation adjustment (4) (16) (35) (13)
---- ---- ----- -----
Comprehensive income (loss) $ (4) $ 3 $ (33) $ 10
==== ==== ===== =====
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN MILLIONS) ADDITIONAL ACCUMULATED
COMMON PAID-IN TREASURY DEFERRED COMPREHENSIVE RETAINED
STOCK CAPITAL STOCK COMPENSATION INCOME (LOSS) EARNINGS
----------- -------------- ----------- ---------------- ------------------ -------------
Balance, December 31, 2000 $1 $1,073 $(60) $(3) $(183) $132
Net income for the period 28
Dividends declared (8)
Cumulative effect of
adoption of SFAS 133,
net of tax 14
Current period gain (loss)
on cash flow hedges, net
of tax (40)
Translation adjustment (35)
Other 1
----------- -------------- ----------- ---------------- ------------------ -------------
Balance, June 30, 2001 $1 $1,073 $(59) $(3) $(244) $152
----------- -------------- ----------- ---------------- ------------------ -------------
See Notes To Condensed Consolidated Financial Statements
10Q-4
PART I FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS) FOR THE SIX MONTHS ENDED
JUNE 30,
2001 2000
---------- -----------
CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES
Net income $ 28 $ 23
Non-cash charges (credits) to net income:
Depreciation and amortization 66 69
Minority interest in earnings 5 10
Income from non-consolidated affiliates (8) (1)
Loss on disposal of fixed assets 1 3
Changes in trade working capital, net of effect of acquisitions:
Accounts receivable and prepaid items (40) 7
Inventories 15 (26)
Accounts payable and accrued liabilities (46) (20)
Other (3) (12)
----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 18 53
----------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES:
Capital expenditures, net of proceeds on disposal (39) (56)
Payments for acquisitions, net of cash acquired (77) (117)
----------------------------------------------------------------------------------------------------------------
Net cash used for investing activities (116) (173)
----------------------------------------------------------------------------------------------------------------
CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES:
Proceeds from borrowings 122 231
Payments on debt (21) (67)
Dividends paid (15) (7)
Common stock repurchased -- (44)
----------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 86 113
----------------------------------------------------------------------------------------------------------------
Decrease in cash and cash equivalents (12) (7)
Effect of foreign exchange rate changes on cash (2) 1
Cash and cash equivalents, beginning of period 41 41
----------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 27 $ 35
================================================================================================================
See Notes to Condensed Consolidated Financial Statements
10Q-5
CORN PRODUCTS INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
References to the "Company" are to Corn Products International, Inc.
and its consolidated subsidiaries. These statements should be read in
conjunction with the consolidated financial statements and the related notes to
those statements contained in the Company's Annual Report to Stockholders that
were incorporated by reference in Form 10-K for the year ended December 31,
2000.
The unaudited condensed consolidated interim financial statements
included herein were prepared by management and reflect all adjustments
(consisting solely of normal recurring items) which are, in the opinion of
management, necessary to present a fair statement of results of operations for
the interim periods ended June 30, 2001 and 2000 and the financial position of
the Company as of June 30, 2001 and December 31, 2000. The results for the three
months and the six months ended June 30, 2001 are not necessarily indicative of
the results expected for the year.
Certain prior year amounts have been reclassified in the Condensed
Consolidated Statements of Cash Flow to conform with the current year
presentation.
2. ADOPTION OF NEW ACCOUNTING STANDARDS
Effective January 1, 2001, the Company adopted Statement of Financial
Accounting Standards No. 133 ("SFAS 133"), "Accounting for Derivative
Instruments and Hedging Activities." SFAS 133 establishes standards for
recognition and measurement of derivatives and hedging activities. As a result
of the adoption, the Company recorded a $14 million credit (net of income taxes
of $8 million) to other comprehensive income (loss) as a cumulative effect of a
change in accounting for derivatives that hedge variable cash flows of certain
forecasted transactions.
The Company uses derivative financial instruments to minimize the
exposure of price risk related to corn and natural gas purchases used in the
manufacturing process. The derivative financial instruments consist of open
futures contracts and options traded through regulated commodity exchanges and
are valued at fair value in the June 30, 2001 Condensed Consolidated Balance
Sheet. The contracts used to mitigate the price risk related to corn and natural
gas purchases are designated as effective cash flow hedges for a portion of the
corn and natural gas usage over the next twelve months. Unrealized gains and
losses associated with marking the contracts to market are recorded as a
component of other comprehensive income (loss) and included in the stockholders'
equity section of the balance sheet as part of accumulated comprehensive income
(loss). These gains and losses are recognized in earnings in the month in which
the related corn and natural gas is used, or in the month a hedge is determined
to be ineffective. At June 30, 2001, the Company's accumulated comprehensive
income (loss) account included $26 million of unrealized losses, net of a $14
million tax benefit, related to future transactions, which are expected to be
recognized in earnings within the next twelve months. There were no ineffective
hedges for the first half of 2001.
10Q-6
3. JOINT MARKETING COMPANY
On December 1, 2000, the Company and Minnesota Corn Processors, LLC
("MCP") consummated an operating agreement to form CornProductsMCP Sweeteners
LLC ("CPMCP"), a joint marketing company that, effective January 1, 2001, began
distributing throughout the United States sweeteners supplied from the Company
and MCP. CPMCP is owned equally by the Company and MCP through membership
interests providing each company with a 50 percent voting interest in CPMCP.
Additionally, CPMCP's Board of Directors is composed of an equal number of
representatives from both members. The Company accounts for its interest in
CPMCP as a non-consolidated affiliate under the equity method of accounting.
Both the Company and MCP continue to own and operate their respective
production facilities and sell all U.S. production of certain designated
sweeteners to CPMCP for exclusive distribution in the United States.
Additionally, any designated sweetener production from the Company's Canada and
Mexico operations sold into the U.S. is distributed through CPMCP. Sales to
CPMCP are made at pre-determined market related prices.
Sales to CPMCP are recognized at the time title to the goods and all
risks of ownership transfer to CPMCP. The Company eliminates 100 percent of the
profit associated with sales to CPMCP until the risk of ownership and title to
the product pass from CPMCP to its customers.
The Company records its share of CPMCP's net earnings as earnings from
a non-consolidated affiliate. The amount recorded represents our allocated share
of the net earnings of CPMCP based upon the percentage of designated product
volumes supplied to CPMCP by the Company as compared to the total designated
product volumes supplied to CPMCP by the Company and our venture partner, MCP.
4. ACQUISITIONS
On January 5, 2001, the Company increased its ownership in Doosan Corn
Products Korea, Inc., its consolidated Korean affiliate from 50 to 75 percent
for $65 million in cash. The Company recorded $10 million of goodwill related
to the purchase. On March 2, 2001, through a multi-step transaction the Company
acquired a controlling 60 percent interest in a tapioca starch and sweetener
company in Thailand. Cash paid for the aforementioned acquisitions and other
related obligations totaled $75 million during the year. Had the
acquisitions occurred at the beginning of the year, the effect on the Company's
financial statements would not have been significant.
5. INVENTORIES ARE SUMMARIZED AS FOLLOWS:
At At
June 30, 2001 December 31, 2000
------------- -----------------
Finished and in process....................... $ 95 $100
Raw materials................................. 76 95
Manufacturing supplies and other.............. 40 37
-------------------------------------------------------------------------
Total Inventories............................. $211 $232
==========================================================================
10Q-7
6. SEGMENT INFORMATION
The Company operates in one business segment - Corn Refining - and is
managed on a geographic regional basis. Its North America operations include
corn-refining businesses in the United States, Canada and Mexico and its
non-consolidated equity interest in CPMCP. Also included in this group is its
North American enzyme business. Its Rest of World operations have been separated
into South America and Asia/Africa. Previously, such operations were combined
and reported as Rest of World. Prior year information is presented for
comparability purposes. Its South America operations include corn-refining
businesses in Brazil, Argentina, Colombia, Chile, Ecuador and Uruguay. Its
Asia/Africa operations include corn-refining businesses in Korea, Pakistan,
Malaysia, Thailand and Kenya.
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
(In millions) 2001 2000 2001 2000
-------------------------- ------------------------
NET SALES
North America $316.6 $297.4 $596.7 $580.6
Rest of World:
South America 103.6 112.4 220.9 210.6
Asia/Africa 62.0 64.1 119.1 126.9
------ ------ ------ ------
Total $482.2 $473.9 $936.7 $918.1
====== ====== ====== ======
OPERATING INCOME
North America $ 17.5 $ 23.9 $ 31.7 $ 44.1
Rest of World:
South America 15.4 14.7 34.3 27.2
Asia/Africa 13.1 15.9 23.6 29.1
Corporate (3.8) (3.6) (7.8) (6.7)
Special Charges -- -- -- (20.0)
------ ------ ------ ------
Total $ 42.2 $ 50.9 $ 81.8 $ 73.7
====== ====== ====== ======
AT AT
(In millions) JUNE 30, 2001 DECEMBER 31, 2000
------------- -----------------
TOTAL ASSETS
North America $1,406 $1,396
Rest of World:
South America 601 647
Asia/Africa 304 296
------ ------
Total $2,311 $2,339
====== ======
10Q-8
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2001
WITH COMPARATIVES FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2000
RESULTS OF OPERATIONS
NET SALES. Second quarter net sales totaled $482 million, up 2 percent
over 2000 sales of $474 million, reflecting a 5 percent volume increase and a 2
percent price/mix improvement, which more than offset a 5 percent reduction
attributable to foreign currency translation. For the six months, net sales grew
2 percent to $937 million, on 7 percent higher volumes partially offset by
unfavorable effects of foreign currency translation.
North American net sales were up 6 percent for the three months ended
June 30, 2001 from the same period last year. The increase in sales was mainly
attributable to higher volumes. Modest price/mix gains were largely offset by
unfavorable currency translation effects. North American sales for the first
half of 2001 increased 3 percent over last year driven primarily by a 4 percent
volume increase. Effective with the start-up of CPMCP (see Note 3 to the
Condensed Consolidated Financial Statements), in 2001 the Company began selling
certain designated sweetener production destined for sale in the U.S. to CPMCP
at pre-determined market related prices. CPMCP, a non-consolidated affiliate,
sells such sweeteners as well as those provided by MCP, our venture partner, to
third parties. Since we account for our interest in CPMCP as a non-consolidated
affiliate under the equity method of accounting, our share of the net earnings
from CPMCP's operations is reflected in our Condensed Consolidated Statement of
Income as income from non-consolidated affiliates.
South American net sales for second quarter 2001 decreased 8 percent
from the prior year period as the unfavorable effect of weaker currency exchange
rates throughout the region more than offset a 3 percent volume increase and a
modest price/mix improvement. First half 2001 net sales for South America
increased 5 percent over the prior year period as an 18 percent volume increase,
driven principally by the merged Argentine operations, more than offset
unfavorable currency translation effects associated with weaker currencies
throughout the region. A 2 percent price/mix improvement in the region also
contributed to the year over year sales increase.
Asia/Africa net sales for second quarter 2001 declined 3 percent from
the prior year period as the translation effects of weaker foreign currencies
throughout the region more than offset an 8 percent volume increase and a 2
percent price/mix improvement. First half 2001 net sales for Asia/Africa fell 6
percent from last year as weaker local currencies more than offset a 4 percent
volume increase and a 3 percent price/mix improvement.
COST OF SALES AND OPERATING EXPENSES. Cost of sales for the second
quarter and first half of 2001 increased 5 percent and 4 percent, respectively,
from the prior year periods, reflecting higher energy costs and costs associated
with increased volume. For the current quarter, gross profit margins fell to
15.0 percent of net sales from 17.9 percent last year. For first half 2001,
gross profit margins were 15.7 percent compared with 17.7 percent last year. The
reductions in the gross profit margins reflect higher energy costs, lower
by-product selling prices and the impact of the previously mentioned equity
method of accounting treatment pertaining to our CPMCP joint venture.
Operating expenses for the quarter totaled $35.1 million, a 2 percent
increase over 2000, remaining at a constant 7 percent of net sales. Corporate
expenses remained consistent
10Q-9
with 2000 levels. For the six months, operating expenses totaled $74.5 million,
a 5 percent increase over 2000. This increase primarily reflects the inclusion
of a full six months of costs, in the current year, from the Argentine
operations that were acquired in March 2000 and higher general and
administrative expenses.
OPERATING INCOME. Second quarter 2001 operating income decreased 17
percent to $42.2 million from $50.9 million last year. North America operating
income of $17.5 million decreased 27 percent from $23.9 million in the second
quarter of 2000, reflecting higher energy costs and lower by-product selling
prices throughout the region. South America operating income of $15.4 million
for the second quarter of 2001 increased 5 percent from $14.7 million in the
second quarter of 2000 reflecting improved pricing, higher volume and lower
operating costs (despite higher energy costs), which more than offset currency
weakness. Asia/Africa operating income declined 18 percent to $13.1 million in
the current quarter from $15.9 million last year principally due to currency
weakness, particularly in Korea. For the six months, operating income increased
11 percent to $81.8 million from $73.7 million in 2000. Excluding special
charges taken in 2000 for workforce reduction, operating income declined 13
percent to $81.8 million from $93.7 million in 2000. North America operating
income decreased 28 percent to $31.7 million from $44.1 million in 2000,
reflecting the higher energy costs and lower by-product selling prices across
North American markets. South America operating income increased 26 percent to
$34.3 million from $27.2 million last year, driven principally by the inclusion
of a full six months of the merged Argentine businesses' results in 2001 versus
four months in 2000. Asia/Africa operating income declined 19 percent to $23.6
million from $29.1 million last year, mainly due to currency erosion.
FINANCING COSTS. Financing costs for the second quarter of 2001 were
$15.0 million, up from $12.3 million in the comparable period last year.
Year-to-date financing costs rose to $30.6 million from $22.7 million in 2000.
The increased financing costs primarily reflect lower capitalized interest,
an increase in foreign currency transaction losses and the effect of
acquisition related borrowings, partially offset by lower interest rates.
PROVISION FOR INCOME TAXES. The effective tax rate remained at 35
percent for the second quarter and first half of 2001, unchanged from the
corresponding prior year periods. The tax rate is estimated based on the
expected mix of domestic and foreign earnings for the year.
MINORITY INTEREST IN EARNINGS. The decrease in minority interest for
the second quarter and first half of 2001 mainly reflects the Company's
increased ownership in Doosan Corn Products Korea, Inc., our Korean affiliate,
from 50 percent to 75 percent effective January 2001.
NET INCOME. Net income for the quarter ended June 30, 2001, declined 21
percent to $15.3 million, or $0.43 per diluted share, from $19.3 million, or
$0.55 per diluted share, in the second quarter of 2000. The decrease is
attributable to lower operating margins mainly due to higher energy costs, lower
by-product selling prices and foreign currency weakness, as well as to higher
financing costs. For the six months ended June 30, 2001, net income increased 22
percent to $27.9 million, or $0.79 per diluted share, from $22.9 million, or
$0.65 per diluted share, in the first six months of 2000. Excluding the effects
of the special charges taken in 2000, net income for the first half of 2001
declined 22 percent from $35.9 million, or $1.02 per diluted share in 2000.
COMPREHENSIVE INCOME (LOSS). The Company recorded a comprehensive loss
of $4 million for the second quarter of 2001 as compared with comprehensive
income of $3 million last year. The decrease resulted from lower net income and
losses recorded on cash flow hedges, partially offset by a $12 million favorable
variance in the currency translation adjustment. For the first half of 2001, the
Company recorded a comprehensive loss of $33
10Q-10
million compared to comprehensive income of $10 million in the prior year
period. The decrease reflects net losses on cash flow hedges and unfavorable
currency translation adjustments. The negative $35 million currency translation
adjustment for the six months ended June 30, 2001, compares to a negative $13
million adjustment in the year ago period. The unfavorable $35 million currency
translation adjustment related primarily to the negative impact of weakened
local currencies, particularly in Brazil and Korea, versus a strengthening U.S.
dollar.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2001, the Company's total assets decreased to $2,311
million from $2,339 million at December 31, 2000. The decrease in total assets
principally reflects the impact of unfavorable currency translation adjustments
on fixed assets in foreign markets, particularly Brazil and Korea.
For the six months ending June 30, 2001, net cash provided by operating
activities was $18 million, compared to $53 million in the first half of 2000,
reflecting an increase in working capital, due in part, to margin calls on corn
futures of approximately $11 million, $8 million of energy credit receivables
relating to a co-generation facility in Stockton, California and approximately
$12 million of receivables due from CPMCP. The Company will continue to hedge
its corn purchases through the use of corn futures contracts, and accordingly,
will be required to make or be entitled to receive cash deposits for margin
calls depending on the movement in the market price for corn. Cash used for
investing activities totaled $116 million for the first six months of 2001,
reflecting capital expenditures and payments for acquisitions. First half 2001
capital expenditures of $39 million are in line with our capital spending plans
for 2001. The Company's acquisitions and capital expenditures were funded
principally through borrowings.
The Company has a $340 million 5-year revolving credit facility in the
United States due December 2002. In addition, the Company has a number of
short-term credit facilities consisting of operating lines of credit. At June
30, 2001, the Company had total debt outstanding of $816 million compared to
$720 million at December 31, 2000. The increase in debt is mainly attributable
to the funding of acquisitions and capital expenditures. The debt outstanding
includes: $261 million outstanding under the U.S. revolving credit facility at a
weighted average interest rate of 5.7 percent for the six months ended June 30,
2001; $200 million of 8.45 percent senior notes due 2009; and various affiliate
indebtedness totaling $355 million which includes borrowings outstanding under
local country operating credit lines. The weighted average interest rate on
affiliate debt was approximately 8.5 percent for the first half of 2001.
The Company expects that its operating cash flows and borrowing
availability under its credit facilities will be more than sufficient to fund
its anticipated capital expenditures, dividends and other investing and/or
financing strategies for the foreseeable future.
MINORITY INTEREST IN SUBSIDIARIES. Minority interest in subsidiaries
decreased $56 million to $152 million at June 30, 2001 from $208 million at
December 31, 2000. The decrease is mainly attributable to our purchase of the
additional 25 percent interest in our Korean business.
10Q-11
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, "Business Combinations" ("SFAS 141") which supersedes APB Opinion
No. 16, "Business Combinations", and SFAS No. 38, "Accounting for Preacquisition
Contingencies of Purchased Enterprises". SFAS 141 addresses financial accounting
and reporting for business combinations and requires that all business
combinations within the scope of SFAS 141 be accounted for using only the
purchase method. SFAS 141 is required to be adopted for all business
combinations initiated after June 30, 2001. Management has assessed the impact
of the adoption of SFAS 141 on the consolidated financial statements and
believes the impact will not be material.
Also in June 2001, the FASB issued SFAS No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142") which supersedes APB Opinion No. 17, "Intangible
Assets". SFAS 142 addresses how intangible assets that are acquired individually
or with a group of other assets (but not those acquired in a business
combination) should be accounted for in financial statements upon their
acquisition. SFAS 142 also addresses how goodwill and other intangible assets
should be accounted for after they have been initially recognized in the
financial statements. The provisions of SFAS 142 are required to be applied
starting with fiscal years beginning after December 15, 2001. SFAS 142 is
required to be applied at the beginning of an entity's fiscal year and to be
applied to all goodwill and other intangible assets recognized in its financial
statements at that date. Management is currently evaluating the impact that
adoption of SFAS 142 will have on the consolidated financial statements.
FORWARD-LOOKING STATEMENTS
This Form 10-Q report contains certain forward-looking statements concerning the
Company's financial position, business and future earnings and prospects, in
addition to other statements using words such as "anticipate," "believe,"
"plan," "estimate," "expect," "intend" and other similar expressions. These
statements contain certain inherent risks and uncertainties. Although we believe
our expectations reflected in these forward-looking statements are based on
reasonable assumptions, stockholders are cautioned that no assurance can be
given that our expectations will prove correct. Actual results and developments
may differ materially from the expectations conveyed in these statements, based
on factors such as the following: fluctuations in worldwide commodities markets
and the associated risks of hedging against such fluctuations; fluctuations in
aggregate industry supply and market demand; general economic, business, market
and weather conditions in the various geographic regions and countries in which
we manufacture and sell our products, including fluctuations in the value of
local currencies, energy costs and availability and changes in regulatory
controls regarding quotas, tariffs and biotechnology issues; and increased
competitive and/or customer pressure in the corn refining industry. 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. 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 risk factors, see the Company's most recently filed Annual Report
on Form 10-K and subsequent reports on Forms 10-Q or 8-K.
10Q-12
ITEM 3
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This information is set forth in the Company's Annual Report on Form
10-K for the year ended December 31, 2000, and is incorporated herein by
reference. There have been no material changes to the Company's market risk
during the three and six months ended June 30, 2001.
10Q-13
PART II OTHER INFORMATION
ITEM 4
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the annual meeting of stockholders held on May 16, 2001, the following
matters were submitted to a vote of security holders. The number of votes cast
for, against, or withheld, and the number of abstentions as to each such matter
were as follows:
1. ELECTION OF DIRECTORS
The following nominees for election as Directors of the
Company were elected for terms expiring in the year indicated:
Name Term Expires Votes For Votes Withheld
---- ------------ --------- --------------
Karen L. Hendricks 2004 29,747,545 152,869
Bernard H. Kastory 2004 29,784,766 115,648
Samuel C. Scott III 2004 29,804,504 95,910
The other following Directors of the Company are continuing in
office for terms expiring in the year indicated:
Name Term Expires
---- ------------
Alfred C. DeCrane, Jr. 2002
Guenther E. Greiner 2002
Richard G. Holder 2002
Konrad Schlatter 2002
Ignacio Aranguren-Castiello 2003
Ronald M. Gross 2003
William S. Norman 2003
Clifford B. Storms 2003
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The stockholders ratified the appointment of KPMG LLP as
independent auditors for the Company for 2001 with 29,767,502
votes cast in favor, 102,539 votes cast against and 30,374 votes
abstained.
10Q-14
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibits required by Item 601 of Regulation S-K are listed in the
Exhibit Index hereto.
b) Reports on Form 8-K
No Reports on Form 8-K were filed by the Company during the quarter
ended June 30, 2001.
All other items hereunder are omitted because either such item is inapplicable
or the response is negative.
10Q-15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CORN PRODUCTS INTERNATIONAL, INC.
DATE: December 21, 2001
By /s/ James Ripley
-------------------------------------
James Ripley
Vice President - Finance,
Chief Financial Officer and
Principal Accounting Officer
10Q-16
EXHIBIT INDEX
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
11 Statement re: computation of earnings per share
10Q-17