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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1997
Commission file number 1-13397
CORN PRODUCTS INTERNATIONAL, INC.
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(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 22-3514823
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
6500 SOUTH ARCHER ROAD, BEDFORD PARK, ILLINOIS 60501-1933
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (708) 563-2400
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
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Common Stock, $.01 par value per share New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
(currently traded with Common Stock)
Securities registered pursuant to Section 12(g) of the Act:
NONE
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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 such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or
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information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K. [ ]
The aggregate market value of the registrant's voting stock held by
nonaffiliates of the registrant (based upon the per share closing price of
$32.125 on March 23, 1998, and, for the purpose of this calculation only, the
assumption that all registrant's directors and executive officers are
affiliates) was approximately $1,130,018,013.
The number of shares outstanding of the registrant's Common Stock, par
value $.01 per share, as of March 23, 1998, was 35,652,134.
Documents Incorporated by Reference:
Information required by Part II (Items 6, 7 and 8) and Part IV (Item 14(a)(1))
of this document is incorporated by reference to certain portions of the
registrant's 1997 Annual Report to Stockholders.
Information required by Part III (Items 10, 11, 12 and 13) of this document is
incorporated by reference to certain portions of the registrant's definitive
Proxy Statement distributed in connection with its 1998 Annual Meeting of
Stockholders.
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PART I.
ITEM 1. BUSINESS
THE COMPANY
Corn Products International, Inc. was formed in March 1997 to assume the
operations of the corn refining business (the "Corn Refining Business") of
Bestfoods, Inc., formerly CPC International Inc. ("Bestfoods") and to effect
the distribution of 100% of the outstanding shares of the Company to the
Bestfoods common stockholders. On December 31, 1997, Bestfoods transferred the
assets and related liabilities of its Corn Refining Business to the Company.
Effective at 11:59:59 p.m. on December 31, 1997, Bestfoods distributed all of
the common stock of the Company to holders of common stock of Bestfoods. Since
that time, the Company has operated as an independent company whose common
stock is traded on the New York Stock Exchange. Unless the context indicates
otherwise, references to the "Company" and "Corn Products" refer to the Corn
Refining Business of Bestfoods for periods prior to January 1, 1998 and to Corn
Products International, Inc. and its subsidiaries for the periods on or after
such date.
OVERVIEW
The Corn Refining Business dates back to the original formation of
Bestfoods' predecessor over 90 years ago. In 1906, Corn Products Refining
Company was formed through an amalgamation of virtually all the corn syrup and
starch companies in the United States. International expansion followed soon
thereafter. In 1928, the Corn Refining Business commenced Latin American
operations in Brazil, followed quickly by expansions into Argentina and Mexico.
Corn Products International, Inc., together with its subsidiaries,
produces a large variety of food ingredients and industrial products derived
from the wet milling of corn and other starch-based materials (such as tapioca
and yucca). The Company is one of the largest corn refiners in the world and
the leading corn refiner in Latin America. In addition, it is the world's
leading producer of dextrose and has strong regional leadership in corn starch.
The Company's consolidated operations are located in ten countries with 19
plants and, in 1997, the Company had consolidated net sales of approximately
$1.4 billion. The Company also holds interests in 11 other countries through
unconsolidated joint ventures and allied operations, which operate an
additional 19 plants. Approximately 60% of the Company's revenues are
generated in North America with the remainder coming from Latin America, Asia
and Africa.
Corn refining is a capital-intensive two-step process that involves the
wet milling and processing of corn. During the front end process, corn is
steeped in water and separated into starch and co-products such as animal feed
and germ. The starch is then either dried for sale or further modified or
refined through various processes to make sweeteners and other starch-based
products designed to serve the particular needs of various industries. The
Company's sweetener
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products include high fructose corn syrups ("HFCS"), glucose corn syrups,
high maltose corn syrups, dextrose, maltodextrins and glucose and corn syrup
solids. The Company's starch-based products include both industrial and food
grade starches.
The Company supplies a broad range of customers in over 60 industries.
The Company's most important customers are in the food and beverage,
pharmaceuticals, paper products, corrugated and laminated paper, textiles and
brewing industries and in the animal feed markets worldwide. The Company
believes its customers value its local approach to service.
BUSINESS STRATEGY
Corn Products' business strategy is to focus its management, technical and
financial resources on its areas of strength. Specifically, the Company
intends to: (i) maintain and grow its leading market positions; (ii) drive for
delivered cost leadership; (iii) provide high quality products and superior
service valued by customers; and (iv) expand in existing markets and enter new
markets.
Maintain and Grow Leading Market Positions. The Company intends to
continue to leverage its worldwide expertise and seek to grow its position as a
leading corn refiner in markets where it currently has a strong leadership
position by, among other things, expanding capacity to meet current and
anticipated customer needs.
Drive for Delivered Cost Leadership. The Company has implemented and
intends to continue to implement productivity enhancing and cost-saving
programs. This effort includes improving facility reliability by further
developing successful preventative maintenance programs, as well as striving
for consistent logistical excellence.
Provide High Quality Products and Superior Service. The Company believes
that it delivers high quality products and provides superior customer service.
The Company plans to continue to improve its service levels and focus on
customer needs to gain additional preferred supplier relationships.
Expand in Existing Markets and Enter New Markets. The Company believes it
is well-positioned through its global alliances and joint ventures to seize
opportunities for expansion in existing markets and entrance into new markets.
The Company also intends to form additional strategic alliances with local corn
refiners as a cost-effective method of expanding into emerging markets. The
Company plans to enter new geographical markets directly or through export
sales, including markets in Asia, Africa and Eastern Europe.
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PRODUCTS
The Company sells sweetener products that account for approximately 55% of
the net sales of the Corn Refining Business, starch products that account for
approximately 20% of net sales, and co-products that account for approximately
25% of net sales.
Sweetener Products. The Company's sweetener products accounted for 54%,
or $761 million, of its net sales in 1997; 55%, or $842 million, and 57%, or
$786 million, of net sales in 1996 and 1995, respectively.
High Fructose Corn Syrup: The Company produces two types of high
fructose corn syrup: (i) HFCS-55, which is primarily used as a sweetener
in soft drinks made in the United States, Canada, Mexico and Japan, and
(ii) HFCS-42, which is used as a sweetener in various consumer products
such as fruit-flavored beverages, yeast-raised breads, rolls, doughs,
ready-to-eat cakes, yogurt and ice cream.
Glucose Corn Syrups: Corn syrups are fundamental ingredients in many
industrial products and are widely used in food products such as baked
goods, snack foods, beverages, canned fruits, condiments, candy and other
sweets, dairy products, ice cream, jams and jellies, prepared mixes and
table syrups. Corn Products offers corn syrups that are manufactured
through an ion-exchange process, a method that creates the highest
quality, purest corn syrups.
High Maltose Corn Syrup: This special type of glucose syrup has a
unique carbohydrate profile, making it ideal for use as a source of
fermentable sugars in brewing beers. High maltose syrups are also used in
the production of confections, canning and some other food processing
applications.
Dextrose: The Company was granted the first U.S. patent for dextrose
in 1923. The Company currently produces dextrose products that are
grouped in three different categories - monohydrate, anhydrous and
specialty. Monohydrate dextrose is used across the food industry in many
of the same products as glucose corn syrups, especially in confectionery
applications. Anhydrous dextrose is used to make solutions for
intravenous injection and other pharmaceutical applications, as well as
some specialty food applications. Specialty dextrose products are used in
a wide range of applications, from confectionery tableting to dry mixes to
carriers for high intensity sweeteners. Dextrose also has a wide range of
industrial applications, including use in wall board and production of
biodegradable surfactants (surface agents), humectants (moisture agents),
and as the base for fermentation products including vitamins, organic
acids, amino acids and alcohols.
Maltodextrins and Glucose and Corn Syrup Solids: These products have a
multitude of food applications, including formulations where liquid corn
syrups cannot be
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used. Maltodextrins are resistant to browning, provide excellent
solubility, have a low hydroscopicity (do not retain moisture), and are
ideal for their carrier/bulking properties. Corn syrup solids have a
bland flavor, remain clear in solution, are easy to handle and also
provide bluing properties.
Starch Products. Starch products accounted for 23%, or $328 million, of
the Company's net sales in 1997; 22%, or $336 million, and 22%, or $308
million, of net sales in 1996 and 1995, respectively. Starches are an
important component in a wide range of processed foods, used particularly as a
thickener and binder. Corn starch is also sold to corn starch packers for sale
to consumers. Starches are also used in paper production to produce a smooth
surface for printed communications and to improve strength in today's recycled
papers. In the corrugating industry, starches are used to produce high quality
adhesives for the production of shipping containers, display board and other
corrugated applications. The textile industry has successfully used starches
for over a century to provide size and finishes for manufactured products.
Industrial starches are used in the production of construction materials,
adhesives, pharmaceuticals and cosmetics, as well as in mining, water
filtration and oil and gas drilling.
Enzymes. Enzymes are produced and marketed for a variety of food and
industrial applications.
Co-Products. Co-products accounted for 23%, or $329 million, of the
Company's net sales in 1997; 23%, or $346 million, and 21%, or $293 million, of
net sales in 1996 and 1995, respectively. Refined corn oil is sold to packers
of cooking oil and to producers of margarine, salad dressings, shortening,
mayonnaise and other foods. Corn gluten feed is sold as animal feed. Corn
gluten meal and steepwater are sold as additives for animal feed.
OPERATIONS
The Company's North American operations, which include the U.S., Canada
and Mexico, operate 11 plants (including four owned by unconsolidated joint
ventures), producing regular and modified starches, dextrose, high fructose and
high maltose corn syrups and corn syrup solids, dextrins and maltodextrins,
caramel color and sorbitol. The Company's plant in Bedford Park, Illinois is a
major supplier of starch and dextrose products for the Company's U.S. and
export customers. A 100 million pound dextrose expansion was completed at the
Bedford Park plant in January of 1996. The Company's other U.S. plants in
Winston-Salem, North Carolina and Stockton, California enjoy strong market
shares in their local areas, as do the Company's Canadian plants in Cardinal,
London and Port Colborne, Ontario. In Mexico, the Company's joint venture with
Arancia Industrial S. A. de C. V. is that country's largest corn refiner. The
venture was the first in Mexico to produce HFCS-55 for sale to the soft drink
bottling industry.
The Company is the largest corn refiner in Latin America, with leading
market shares in Chile, Brazil and Colombia and a strong position in Argentina.
Its Latin American consolidated operations have 9 plants that produce regular,
modified, waxy and tapioca starches, high maltose
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and corn syrups, dextrins and maltodextrins, dextrose, caramel color, sorbitol
and vegetable adhesives.
The Company has additional subsidiaries in Kenya, Malaysia and Pakistan,
which operate three additional plants. These operations produce modified,
regular, waxy and tapioca starches, dextrins, glucose, dextrose and caramel
color.
In addition to the operations in which it engages directly and through
joint ventures, the Company also has numerous strategic alliances through
technical license agreements with companies in Australia, India, Japan, New
Zealand, Thailand, South Africa, Zimbabwe, Serbia and Venezuela. As a group,
the Company's strategic alliance partners operate 15 plants and produce high
fructose, glucose and high maltose syrups (both corn and tapioca), regular,
modified, waxy and tapioca starches, dextrose and dextrins, maltodextrins and
caramel color. These products have leading market positions in many of their
target markets.
COMPETITION
The corn refining industry is highly competitive. Most of the Company's
products compete with virtually identical products and derivatives manufactured
by other companies in the industry. The U.S. market is the most competitive,
with participation by eleven corn refiners, including ADM Corn Processing
Division ("ADM") (a division of Archer Daniels Midland Company), Cargill, A.E.
Staley Manufacturing Co. ("Staley") (a subsidiary of Tate & Lyle, PLC) and
National Starch and Chemical Company ("National Starch") (a subsidiary of
Imperial Chemicals Industries plc). In Latin America, Cargill has corn
refining operations in Brazil, National Starch has operations in Brazil and
Mexico, and ALMEX, a joint venture between ADM and Staley, has operations in
Mexico. Several local corn refiners also operate in Latin America.
Competition within markets is largely based on price, quality and product
availability.
Several of the Company's products also compete with products made from raw
materials other than corn. High fructose corn syrup and monohydrate dextrose
compete principally with cane and beet sugar products. Co-products such as
corn oil and gluten meal compete with products of the corn dry milling industry
and with soybean oil and soybean meal. Fluctuations in prices of these
competing products may affect prices of, and profits derived from, the
Company's products.
CUSTOMERS
The Company supplies a broad range of customers in over 60 industries.
Historically, Bestfoods' worldwide branded foods business has been one of the
Company's largest customers, accounting for approximately 12.5% of total sales
in 1997. In addition, approximately 15% of the Company's worldwide sales in
1997 represented sales of HFCS to international, regional and local companies
engaged in the soft drink industry, primarily in North America.
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RAW MATERIALS
The basic raw material of the corn refining industry is yellow dent corn.
In the United States, the corn refining industry processes about 10% to 15% of
the annual U.S. corn crop. The supply of corn in the United States has been,
and is anticipated to continue to be, adequate for the Company's domestic
needs. The price of corn, which is determined by reference to prices on the
Chicago Board of Trade, fluctuates as a result of three primary supply factors
- -- farmer planting decisions, climate and government policies -- and three
major market demand factors -- livestock feeding, shortages or surpluses of
world grain supplies and domestic and foreign government policies and trade
agreements.
Corn is also grown in other areas of the world, including Canada, South
Africa, Argentina, Brazil, China and Australia. The Company's affiliates
outside the United States utilize both local supplies of corn and corn imported
from other geographic areas, including the United States. The supply of corn
for these affiliates is also generally expected to be adequate for the
Company's needs. Corn prices for the Company's non-U.S. affiliates generally
fluctuate as a result of the same factors that affect U.S. corn prices.
Due to the competitive nature of the corn refining industry and the
availability of substitute products not produced from corn, such as sugar from
cane or beets, end product prices may not necessarily fluctuate in relation to
raw material costs of corn.
Over 55% of the Company's starch and refinery products are sold at prices
established in supply contracts lasting for periods of up to one year. The
remainder of the Company's starch and refinery products are not sold under firm
pricing arrangements and actual pricing for those products is affected by the
cost of corn at the time of production and sale.
The Company follows a policy of hedging its exposure to commodities
fluctuations with commodities futures contracts for certain of its North
American corn purchases. All firm priced business is hedged when contracted.
Other business may or may not be hedged at any given time based on management's
judgment as to the need to fix the costs of its raw materials to protect the
Company's profitability. Realized gains and losses arising from such hedging
transactions are considered an integral part of the cost of those commodities
and are included in the cost when purchased. See "Risk Factors -- Potential
Losses from Commodities Hedging Activities."
GEOGRAPHIC SCOPE
The Company engages in business in over 20 countries, operating directly
and through affiliates in nine countries with 19 plants and indirectly through
joint ventures and technical licensing agreements elsewhere in Latin America,
Asia, Africa, Australia and New Zealand. The Company has wholly owned
operations in North America, Latin America and Africa, a 49% interest in a
joint venture in Mexico, and other joint venture interests and licensing and
technical agreements in Latin America, Asia and Africa. In 1997, approximately
60% of the Company's net
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sales was derived from its operations in North America and 40% from
operations in other geographic areas, primarily Latin America (representing
over 80% of sales and operating income of other geographic areas). See Note 14
of Notes to Consolidated Financial Statements for certain financial information
with respect to geographic areas.
RESEARCH AND DEVELOPMENT
The Company's product development activity is focused on developing
product applications for identified customer and market needs. Through this
approach, the Company has developed value-added products for use in the
corrugated paper, food, textile, baking and confectionery industries. The
Company usually collaborates with customers to develop the desired product
application either in the customers' facilities, the Company's technical
service laboratories or on a contract basis. The Company's marketing, product
technology and technology support staffs devote a substantial portion of their
time to these efforts. Product development is enhanced through technology
transfers pursuant to existing licensing arrangements.
SALES AND DISTRIBUTION
The Company's products are sold directly to manufacturers and distributors
by salaried sales personnel, who are generally dedicated to customers in a
geographic region. In addition, the Company has a staff that provides
technical support to the sales personnel on an industry basis. The Company
generally utilizes contract truckers to deliver bulk products to customer
destinations but also has some of its own trucks for product delivery. In
North America, the trucks generally ship to nearby customers. For those
customers located considerable distances from Company plants, a combination of
railcars and trucks is used to deliver product. Railcars are generally leased
for terms of five to fifteen years.
PATENTS, TRADEMARKS AND TECHNICAL LICENSE AGREEMENTS
The Company owns a number of patents which relate to a variety of products
and processes and a number of established trademarks under which the Company
markets such products. The Company also has the right to use certain other
patents and trademarks pursuant to patent and trademark licenses. The Company
does not believe that any individual patent or trademark is material. There is
not currently any pending challenge to the use or registration of any of the
Company's significant patents or trademarks that would have a material adverse
impact on the Company or its results of operations.
The Company is a party to nine technical license agreements with third
parties in other countries whereby the Company provides technical, management
and business advice on the operations of corn refining businesses and receives
royalties in return. These arrangements provide the Company with product
penetration in the various countries in which they exist, as well as experience
and relationships that could facilitate future expansion. The duration of the
agreements ranges from one to ten years or longer, and many of these
relationships have been in place for many years. These
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agreements in the aggregate provide approximately $6 million of annual
revenue to the Company.
EMPLOYEES
As of December 31, 1997, the Corn Refining Business had approximately
4,300 employees, of which approximately 950 were located in the U.S.
Approximately 30% of U.S. and 22% of non-U.S. employees are unionized. The
Company believes its union and non-union employee relations are good.
GOVERNMENT REGULATION AND ENVIRONMENTAL MATTERS
As a manufacturer and maker of food items and items for use in the
pharmaceutical industry, the Company's operations and the use of many Company
products are subject to various U.S., state, foreign and local statutes and
regulations, including the Federal Food, Drug and Cosmetic Act and the
Occupational Safety and Health Act, and to regulation by various government
agencies, including the United States Food and Drug Administration, which
prescribe requirements and establish standards for product quality, purity and
labeling. The finding of a failure to comply with one or more regulatory
requirements can result in a variety of sanctions, including monetary fines.
The Company may also be required to comply with U.S., state, foreign and local
laws regulating food handling and storage. The Company believes its
competitive position has not been negatively affected by these laws and
regulations.
The operations of the Company are also subject to various U.S., state,
foreign and local laws and regulations with respect to environmental matters,
including air and water quality and underground fuel storage tanks, and other
regulations intended to protect public health and the environment. The Company
believes it is in material compliance with all such applicable laws and
regulations. Based upon current laws and regulations and the interpretations
thereof, the Company does not expect that the costs of future environmental
compliance will be a material expense, although there can be no assurance that
the Company will remain in compliance or that the costs of remaining in
compliance will not have a material adverse effect on the Company's financial
condition and results of operations.
The Company currently anticipates that it will spend approximately $4.9
million in fiscal 1998 for environmental control equipment to be incorporated
into existing facilities and in planned construction projects. This equipment
is intended to enable the Company to continue its policy of compliance with
existing known environmental laws and regulations. Under the U.S. Clean Air
Act Amendments of 1990, air toxics regulations will be promulgated for a number
of industry source categories. The U.S. Environmental Protection Agency's
regulatory timetable specifies the promulgation of standards for vegetable oil
production and for industrial boilers by the year 2000. At that time,
additional pollution control devices may be required at the Company's U.S.
facilities to meet these standards. The ultimate financial impact of the
standards cannot be accurately estimated at this time.
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RELATIONSHIP BETWEEN THE COMPANY AND BESTFOODS
In connection with the spin-off of the Company from Bestfoods at the end
of 1997, the Company entered into various agreements with Bestfoods for the
purpose of governing certain of the ongoing relationships between Bestfoods and
the Company in the future.
The Company entered into a tax indemnification agreement that requires the
Company to indemnify Bestfoods against tax liabilities arising from the loss of
the tax-free reorganization status of the spin-off. This agreement could
restrict the Company, for a two year period, from entering into certain
transactions, including limitations on the liquidation, merger or consolidation
with another company, certain issuances and redemptions of common stock and the
distributions or sale of certain assets.
In connection with the spin-off, the Company agreed that it would retain
$350 million of third party indebtedness. The Company borrowed $190 million
under a 5-year credit agreement with nine banks led by Citibank N.A. The
proceeds from these borrowings were transferred to Bestfoods prior to the
spin-off. The Company, however, remains obligated for the repayment and all
liabilities and obligations under the credit agreement. In addition, the
Company borrowed C$140 million (approximately $100 million) through a
wholly-owned Canadian subsidiary under a separate credit agreement. The
proceeds of these borrowings were also transferred to Bestfoods prior to the
spin-off. The remaining $60 million of indebtedness consisted of amounts owed
under short-term bank borrowings by various local subsidiaries of the Company
that were transferred (together with the liabilities connected with such
borrowings) from Bestfoods to the Company as part of the spin-off.
The Company and Bestfoods also entered into a Master Supply Agreement,
under which the Company and its affiliates will continue to supply Bestfoods
and its affiliates with certain corn refining products at prices based
generally upon prevailing market prices. Sales of products by the Corn
Refining Business to Bestfoods prior to the spin-off, which are reflected in
the financial statements of the Company for the periods prior to January 1,
1998, were generally made at prevailing market prices and were otherwise
generally consistent with the terms of the Master Supply Agreement. Pursuant
to the Master Supply Agreement, Bestfoods will purchase certain products from
the Company and the Company is restricted from certain activities that are
competitive with Bestfoods involving the sale, manufacture or packaging of
"Commodity Consumer Products," which are defined in the Master Supply
Agreement as "corn starch, corn oil, corn syrup and dextrose which are branded
and packaged for sale to the retail trade, club stores, mass merchandisers and
the food service sector." These are activities in which Corn Products has not
engaged in the past. The current term of the Master Supply Agreement expires
on December 31, 1999 and is renewable in whole or in part thereafter upon
mutual agreement of the parties. At this time,
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neither Bestfoods nor the Company has expressed an intention
not to renew the Master Supply Agreement upon its expiration.
EXECUTIVE OFFICERS OF THE COMPANY
Set forth below are the names and ages of all executive officers of the
Company, indicating their positions and offices with the Company.
<TABLE>
<CAPTION>
Name Age All positions and offices with the Company
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<S> <C> <C>
Konrad Schlatter 62 Chairman and Chief Executive Officer of
Corn Products. Mr. Schlatter served as
Senior Vice President of Bestfoods from
1990 to 1997 and Chief Financial Officer
of Bestfoods from 1993 to February 1997.
Samuel C. Scott 53 President and Chief Operating Officer of
Corn Products. Mr. Scott has been
President of Bestfoods' worldwide Corn
Refining Business since 1995 and has been
President of Bestfoods' North American
Corn Refining Business since 1989. He
was elected a Vice President of Bestfoods
in 1991. Mr. Scott is a director of
Motorola, Inc. and Reynolds Metal
Company.
Marcia E. Doane 56 Vice President, General Counsel and
Corporate Secretary of Corn Products.
Ms. Doane has served as Vice President,
Legal and Regulatory Affairs of the Corn
Products Division of Bestfoods since
1996. Prior thereto, she served as
Counsel to the Corn Products Division
from 1994 to 1996. Ms. Doane joined
Bestfoods' legal department in 1989 as
Operations Attorney for the Corn Products
Division.
</TABLE>
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<TABLE>
<CAPTION>
Name Age All positions and offices with the Company
- ---- --- ------------------------------------------
<S> <C> <C>
Frank J. Kocun 55 Vice President and President, Cooperative Management
Group. Mr. Kocun served as President of the Cooperative
Management Group of the Corn Products Division of
Bestfoods since 1991 and as Vice President of the
Cooperative Management Group since 1985. Mr. Kocun
joined Bestfoods in 1968 and has served in various
executive positions in the Corn Products Division and in
Penick Corporation, a Bestfoods subsidiary.
Eugene J.
Northacker 56 Vice President and President, Latin American Division.
Mr. Northacker was appointed President of Bestfoods'
Latin America Corn Refining Division and elected a Vice
President of Bestfoods in 1992. Prior to that, he served
as Business Director of Bestfoods' Latin America Corn
Refining Division from 1989 to 1992, as Corn Refining
General Manager of Bestfoods' then Mexican subsidiary
from 1984 to 1986. Mr. Northacker joined Bestfoods in
1968 in the financial group of Bestfoods' North American
consumer foods division, and has held executive
assignments in several Bestfoods subsidiaries.
Michael R. Pyatt 50 Vice President and Executive Vice President, North
American Division. Mr. Pyatt has served as Chairman,
President and Chief Executive Officer of Canada Starch
Co., Inc., a Bestfoods subsidiary, since 1994 and as
President of the Canadian business of Bestfoods' Corn
Products Division, Vice Chairman of Canada Starch and as
a Vice President of the Corn Products Division since
1992. Mr. Pyatt joined Bestfoods in 1982 and has served
in various sales and marketing positions in the Casco
business.
</TABLE>
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<TABLE>
<CAPTION>
Name Age All positions and offices with the Company
- ---- --- ------------------------------------------
<S> <C> <C>
James W. Ripley 54 Vice President - Finance and Chief Financial Officer.
Mr. Ripley has served as Comptroller of Bestfoods since
1995. Prior thereto, he served as Vice President of
Finance for Bestfoods' North American Corn Refining
Division from 1984 to 1995. Mr. Ripley joined Bestfoods
in 1968 as chief international accountant, and has
subsequently served as Bestfoods' Assistant Corporate
Comptroller, Corporate General Audit Coordinator and
Assistant Comptroller for Bestfoods' European Consumer
Foods Division.
Richard M.
Vandervoort 54 Vice President - Business Development and Procurement,
North American Division. Mr. Vandervoort has served as
Vice President - Business Management and Marketing for
Bestfoods' Corn Products Division since 1989. Mr.
Vandervoort joined Bestfoods in 1971 and has served in
various executive sales positions in Bestfoods' Corn
Products Division and in Peterson/Puritan Inc., a
Bestfoods subsidiary.
Cheryl K. Beebe 42 Treasurer. Ms. Beebe has served as Director of Finance
and Planning for the Corn Refining Business worldwide
from 1995 to 1997, and as Director of Financial Analysis
and Planning for Corn Products North America from 1993.
Ms. Beebe joined Bestfoods in 1980 and has served in
various financial positions in Bestfoods.
James J. Hirchak 43 Vice President - Human Resources. Mr. Hirchak joined
Bestfoods in 1976 and held various Human Resources
positions in Bestfoods until 1984, when he joined
Betsfoods' Corn Products Division. In 1987, Mr. Hirchak
was appointed Director, Human Resources for Corn
Products' North American operation and has served as Vice
President, Human Resources for the Corn Products
Division since 1992.
</TABLE>
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<TABLE>
<CAPTION>
Name Age All positions and offices with the Company
- ---- --- ------------------------------------------
<S> <C> <C>
Jack C. Fortnum 41 Comptroller. Mr. Fortnum has served as the Vice
President of Finance for Refinerias de Maize, Bestfoods'
Argentine subsidiary from 1995 to 1997, as the Director
of Finance and Planning for Latin America Corn Refining
Division from 1993 to 1995, and as the Vice President
and Comptroller of Canada Starch Co., Inc., the Canadian
subsidiary of Bestfoods and Vice President of Finance of
the Canadian Corn Refining Business from 1989.
</TABLE>
ITEM 2. PROPERTIES
The Company operates, directly and through its subsidiaries, 19
manufacturing facilities, 18 of which are owned and one of which is leased
(Jundiai, Brazil). In addition, the Company owns its corporate headquarters in
Bedford Park, Illinois. The following list details the location of the
Company's manufacturing facilities:
<TABLE>
<CAPTION>
U.S. Latin America
----------------------------- ----------------------
<S> <C>
Stockton, California Baradero, Argentina
Bedford Park, Illinois Balsa Nova, Brazil
Winston-Salem, North Carolina Cabo, Brazil
Beloit, Wisconsin Jundiai, Brazil
Mogi-Guacu, Brazil
Canada Llay-Llay, Chile
Barranquilla, Colombia
Cardinal, Ontario Cali, Colombia
London, Ontario Medellin, Colombia
Port Colborne, Ontario
Asia
Africa
Petaling Jaya, Malaysia
Eldoret, Kenya Faisalabad, Pakistan
</TABLE>
In addition to the foregoing, the Company has interests in an additional 19
plants through its interests in unconsolidated joint ventures and allied
operations.
While the Company has achieved high capacity utilization, the Company
believes its manufacturing facilities are sufficient to meet its current
production needs. The Company has preventive maintenance and de-bottlenecking
programs designed to further improve grind capacity and facility reliability.
Page 13
<PAGE> 16
The Company has electricity co-generation facilities at all of its U.S.
and Canadian plants, as well as its plants in Argentina and Pakistan, that
provide electricity at a lower cost than is available from third parties. The
Company generally owns and operates such co-generation facilities itself, but
has two large facilities at its Stockton, California and Cardinal, Ontario
locations that are owned by, and operated pursuant to co-generation agreements
with, third parties.
The Company believes it has competitive, up-to-date and cost-effective
facilities. In recent years, significant capital expenditures have been made
to update, expand and improve the Company's facilities, averaging in excess of
$150 million per year for the last five years. Capital investments have
included the rebuilding of the Company's plant in Cali, Colombia; an expansion
of both grind capacity and dextrose production capacity at the Company's Argo
facility in Bedford Park, Illinois; entry into the high maltose corn syrup
business in Brazil, Colombia and Argentina; and the installation of energy
co-generation facilities in Canada. The Company believes these capital
expenditures will allow the Company to operate highly efficient facilities for
the foreseeable future with further annual capital expenditures that are
significantly below historical averages. During the past three calendar years,
the Company has closed two wholly-owned facilities and one joint venture
operation in an effort to reduce costs because such facilities could not
economically be made efficient. Sales previously generated by the production
at these facilities has been maintained largely through producing products at
other facilities which could more economically supply the product to the
Company's customers. The total sales value of the products previously produced
by these facilities is less than $20 million.
ITEM 3. LEGAL PROCEEDINGS
Under the terms of the agreements relating to the spin-off of the Company
from Bestfoods, the Company agreed to indemnify Bestfoods for certain
liabilities relating to the operation of the Corn Refining Business prior to
the spin-off, including liabilities relating to the proceedings described
below.
In July 1995, Bestfoods received a federal grand jury subpoena in
connection with an investigation by the Antitrust Division of the U.S.
Department of Justice of U.S. corn refiners regarding the marketing of high
fructose corn syrup and other "food additives" (the investigation of Bestfoods
relates only to high fructose corn syrup). Bestfoods has produced the
documents sought by the Justice Department. Bestfoods, as a high fructose corn
syrup producer, was also named as one of the defendants in a number of private
treble damage class actions, by direct and indirect customers, and one
individual action, alleging violations of federal and state antitrust laws.
Following the certification of the consolidated federal class actions,
Bestfoods entered into a settlement of the federal claims for $7 million.
Bestfoods also settled the one individual action
Page 14
<PAGE> 17
(Gray and Company v. Archer Daniels Midland et al., Civ. No. 97-69-AS) in
the United States District Court for the District of Oregon (subsequently
transferred to the United States District Court for the Central District of
Illinois, Peoria Division for consolidation in MDL, Docket No. 1087 and Matter
File No. 95-1477). A stipulated joint dismissal of Bestfoods from the Gray and
Company litigation was received by the court on January 28, 1998. Bestfoods
remains a party to the state law actions filed in Alabama, California, the
District of Columbia, West Virginia, and Kansas, each of which was filed in
1995 or 1996. A state law action filed in Michigan was dismissed on February
4, 1998 for lack of progress after plaintiffs' motion to certify a class was
denied. The amount of damages claimed in the various state law actions is
either unspecified or stated as not exceeding $50,000 per claimant.
The Company is currently subject to claims and suits arising in the
ordinary course of business, including environmental proceedings. The Company
does not believe that the results of such legal proceedings, even if
unfavorable to the Company, will be material to the Company. There can be no
assurance, however, that any claims or suits arising in the future, taken
individually or in the aggregate, will not have a material adverse effect on
the Company's financial condition or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
There were no matters submitted to a vote of securityholders, through the
solicitation of proxies or otherwise, during the fourth quarter ended December
31, 1997.
Page 15
<PAGE> 18
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's Common Stock trades on the New York Stock Exchange under the
symbol "CPO." The following table sets forth, for the periods indicated, the
range of the high and low sales prices of the Company Common Stock as reported
by the Wall Street Journal. At the close of business on March 23, 1998 there
were approximately 23,400 holders of record of the outstanding shares of the
Company's Common Stock. Although the Company's Common Stock is traded on the
New York Stock Exchange, no assurance can be given as to the future price of or
the markets for the Company's Common Stock.
<TABLE>
<CAPTION>
The Company's
Common Stock
----------------
High Low
------- -------
<S> <C> <C>
1997
December 11, 1997 through
December 31, 1997* 32 28 7/8
1998
January 1, 1998 through
March 23, 1998 35 1/8 26 5/16
</TABLE>
_____________
*Prices represent when-issued trading on the New York Stock Exchange. The
Company's Common Stock began regular way trading on January 2, 1998.
To date, the Company has paid no dividends. Management believes that the
payment of a dividend by Corn Products is part of a sound financial policy for
the Company. However, in light of the Company's brief period of operation as
an independent company, management has determined that it is prudent to defer a
decision on the timing and the amount of a dividend until after the Company has
experienced several quarters of independent operation. Management is
responsible for apprising the Company's Board of Directors of the Company's
financial ability to pay a dividend and currently believes that it should be
able to recommend a dividend policy to the Board during the third quarter of
the current year, assuming that the Company's financial performance continues
as currently expected. The payment of a dividend is solely at the discretion
of the Corn Products'
Page 16
<PAGE> 19
Board of Directors. It is subject to the Company's financial results and the
availability of surplus funds to pay dividends.
ITEM 6. SELECTED FINANCIAL DATA
Incorporated by reference from the Annual Report, page 32, section
entitled "Selected Financial Information."
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Incorporated by reference from the Annual Report, pages 8-12, section
entitled "Management's Discussion and Analysis."
YEAR 2000
The Year 2000 issue is the result of certain computer programs being
written using two digits rather than four to define the applicable year.
During 1997, the Company developed a plan to address the Year 2000 issue and
began converting its computer systems to be Year 2000 compliant. A team with
appropriate senior management support was established to identify and correct
Year 2000 issues. Internal software with non-compliant codes is expected to be
either fixed or replaced with software that is compliant with the Year 2000
requirements. This includes all of the Company's manufacturing plants,
building facilities and business systems. The current estimated cost to the
Company to implement its Year 2000 plan is between $3 and $4 million. The
Company expects to complete all necessary modifications by August of 1999, with
80% completed by the end of 1998. The project is currently approximately 60%
complete. There can be no assurance that the project will be successfully
completed on a timely basis, and a failure to so complete could have a material
adverse impact on the Company's ability to manufacture and/or deliver its
products.
RISK FACTORS
UNCERTAIN ABILITY TO REVERSE RECENT DISAPPOINTING FINANCIAL PERFORMANCE.
The Company's ability to generate operating income and to increase
profitability depends to a large extent upon its ability to price finished
products at a level that will cover manufacturing and raw material costs and
provide a profit margin. The Company's ability to maintain appropriate price
levels is determined by a number of factors largely beyond the Company's
control, such as aggregate industry supply and market demand, which may vary
from time to time and by the geographic region of the Company's operations.
For example, the Company's profits sharply declined in 1996 and 1997. The
primary reason for the profit decline in 1997 was a significant expansion of
high fructose corn syrup industry capacity in North America ahead of demand.
The sharp and unusual increase in the cost of corn during 1996, which could not
be fully passed on in increased prices, was the primary cause of
Page 17
<PAGE> 20
the profit decline in 1996. Other factors also affect the Company's
profitability, including the economic conditions in various geographic regions
and countries in which the Company manufactures and sells its finished
products. Accordingly, there can be no assurance that the Company will
successfully reverse these declines in profit.
UNCERTAIN ABILITY TO CONTAIN COSTS OR TO FUND CAPITAL EXPENDITURES. The
Company's future profitability and growth also depends on the Company's ability
to reduce operating costs and per-unit product costs, to maintain and/or
implement effective cost control programs and to develop successful value-added
products and new product applications, while at the same time maintaining
competitive pricing and superior quality products, customer service and
support. The Company's ability to maintain a competitive cost structure
depends on continued containment of manufacturing, delivery and administrative
costs as well as the implementation of cost-effective purchasing programs for
raw materials, energy and related manufacturing requirements. The Company
expects to spend approximately $70 to $100 million per year for worldwide
capital expenditures from 1998 through 2000, primarily to implement
productivity improvements and, if supported by customer demand, expand the
production capacity of its facilities. Additional funds may be needed for
working capital as the Company grows and expands its operations. To the extent
possible, these capital expenditures and other expenses are expected to be
funded from operations. If the Company's cash flow is insufficient to fund
such expenses, the Company may either reduce its capital expenditures or
utilize certain general credit facilities. The Company may also seek to
generate additional liquidity through the sale of debt or equity securities in
private or public markets or through the sale of non-productive assets. The
Company cannot provide any assurance that cash flow from operations will be
sufficient to fund anticipated capital expenditures and working capital
requirements or that additional funds can be obtained from the financial
markets or the sale of assets at terms favorable to the Company. If the
Company is unable to generate sufficient cash flows or raise sufficient
additional funds to fund capital expenditures, it may not be able to achieve
its desired operating efficiencies and expansion plans, which may adversely
impact the Company's competitiveness and, therefore, its results of operations.
COMPETITION; EXPANDING INDUSTRY CAPACITY. The Company operates in a
highly competitive environment. Almost all of the Company's products compete
with virtually identical or similar products manufactured by other companies in
the corn refining industry. In the United States, there are ten other corn
refiners, several of which are divisions of larger enterprises that have
greater financial resources and some of which, unlike the Company, have
vertically integrated their corn refining and other operations. Many of the
Company's products also compete with products made from raw materials other
than corn. Fluctuation in prices of these competing products may affect prices
of, and profits derived from, the Company's products. Competition within
markets is largely based on price, quality and product availability and the
Company experiences price pressures in certain of its markets as a result of
competitors' pricing practices.
PRICE VOLATILITY AND UNCERTAIN AVAILABILITY OF CORN. Corn purchasing
costs, which include the price of the corn plus delivery cost, vary between 40%
and 65% of the Company's product costs. The price and availability of corn are
influenced by economic and industry conditions, including supply and demand
factors such as crop disease and severe weather conditions such as
Page 18
<PAGE> 21
drought, floods or frost, that are difficult to anticipate and cannot be
controlled by the Company. In 1996, profitability was adversely impacted by an
exceptional increase in corn costs which the Company was not able to offset
with an increase in the price of its products. In addition, the price of corn
sweeteners, especially high fructose corn syrup, is indirectly impacted by
government programs supporting sugar prices. There can be no assurance that
the Company will be able to purchase corn at prices that can be adequately
passed on to customers or in quantities sufficient to sustain or increase its
profitability.
POTENTIAL LOSSES FROM COMMODITIES HEDGING ACTIVITIES. The Company enters
into corn futures contracts, or takes hedging positions in the corn futures
markets, in an attempt to minimize the effects of the volatility of corn costs
on operating profits. The effectiveness of such hedging activities is
dependent upon, among other things, the cost of corn and the ability of the
Company to sell sufficient products to utilize all of the corn with respect to
which it has futures contracts. Occasionally, such hedging activities can
themselves result in losses, some of which may be material. During the fourth
quarter of 1996, the Company recognized a loss of $40 million in connection
with the liquidation of certain corn futures contracts. No assurance can be
given that such hedging-related losses will not recur. See Note 10 of Notes to
Consolidated Financial Statements for information with respect to the Company's
hedging position at December 31, 1997.
UNAVAILABILITY OF BESTFOODS' FINANCIAL AND OTHER RESOURCES. Prior January
1, 1998, the Company was operated as an unincorporated division of Bestfoods.
Thus, the Company does not have an operating history as a separate company. As
an independent public company, Corn Products is no longer able to rely on
Bestfoods for financial support or to benefit from its relationship with
Bestfoods to obtain credit.
ABSENCE OF PRIOR TRADING MARKET FOR CORN PRODUCTS COMMON STOCK. Prior to
December 11, 1997, there was no trading for Corn Products Common Stock. The
Corn Products Common Stock is listed on the NYSE under the symbol "CPO". There
can be no assurance as to the prices at which Corn Products Common Stock will
trade in the future. The prices at which such shares trade may fluctuate
significantly and may be lower or higher than the price that would be expected.
Prices for shares of Corn Products Common Stock may be influenced by many
factors, including the depth and liquidity of the market for the shares,
investor perception of the Company, changes in economic conditions in the corn
refining industry and general economic and market conditions. In addition, the
stock market often experiences significant price fluctuations that are
unrelated to the operating performance of the specific companies whose stock is
traded. Market fluctuations, as well as economic conditions, could have a
materially adverse impact on the market price of the shares of Corn Products
Common Stock.
UNCERTAINTY OF DIVIDENDS. The payment of dividends is at the discretion
of the Corn Products Board and will be subject to the Company's financial
results and the availability of surplus funds to pay dividends. No assurance
can be given that the Company will pay any dividends.
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<PAGE> 22
INTERNATIONAL OPERATIONS RISKS. The Company operates a multinational
business and, accordingly, is subject to risks that are inherent in operating
in foreign countries. Approximately 56% of the Company's 1997 revenues were
generated by non-U.S. operations. Due to the significant amount of non-U.S.
revenues, fluctuations in the value of foreign currencies relative to the U.S.
dollar could increase the volatility of the Company's U.S. dollar-denominated
operating results. The Company's non-U.S. operations are also subject to
political, economic and other risks inherent in operating in countries outside
the United States, including possible nationalization, expropriation, adverse
government regulation, imposition of import and export duties and quotas,
currency restrictions, price controls, potentially burdensome taxation and/or
other restrictive government actions.
CERTAIN ANTI-TAKEOVER EFFECTS. Certain provisions of the Company's
Amended and Restated Certificate of Incorporation (the "Corn Products Charter")
and the Company's By-Laws (the "Corn Products By-Laws") and of the Delaware
General Corporation Law (the "DGCL") may have the effect of delaying, deterring
or preventing a change in control of the Company not approved by the Corn
Products Board. These provisions include (i) a classified Board of Directors,
(ii) a requirement of the unanimous consent of all stockholders for action to
be taken without a meeting, (iii) a requirement that special meetings of
stockholders be called only by the Chairman of the Board or the Board of
Directors, (iv) advance notice requirements for stockholder proposals and
nominations, (v) limitations on the ability of stockholders to amend, alter or
repeal the Corn Products By-Laws and certain provisions of the Corn Products
Charter, (vi) authorization for the Corn Products Board to issue without
stockholder approval preferred stock with such terms as the Board of Directors
may determine and (vii) authorization for the Corn Products Board to consider
the interests of creditors, customers, employees and other constituencies of
the Corporation and its subsidiaries and the effect upon communities in which
the Corporation and its subsidiaries do business, in evaluating proposed
corporate transactions. With certain exceptions, Section 203 of the DGCL
("Section 203") imposes certain restrictions on mergers and other business
combinations between the Company and any holder of 15% or more of the Corn
Products Common Stock. In addition, the Company has adopted a stockholder
rights plan (the "Rights Plan"). The Rights Plan is designed to protect
stockholders in the event of an unsolicited offer and other takeover tactics
which, in the opinion of the Corn Products Board, could impair the Company's
ability to represent stockholder interests. The provisions of the Rights Plan
may render an unsolicited takeover of the Company more difficult or less likely
to occur or might prevent such a takeover.
These provisions of the Corn Products Charter and Corn Products By-Laws,
the DGCL and the Rights Plan could discourage potential acquisition proposals
and could delay or prevent a change in control of the Company, although such
proposals, if made, might be considered desirable by a majority of the
Company's stockholders. Such provisions could also make it more difficult for
third parties to remove and replace the members of the Corn Products Board.
Moreover, these provisions could diminish the opportunities for a stockholder
to participate in certain tender offers, including tender offers at prices
above the then-current market value of Corn Products Common Stock, and may also
inhibit increases in the market price of Corn Products Common Stock that could
result from takeover attempts or speculation.
Page 20
<PAGE> 23
LIMITED RELEVANCE OF HISTORICAL FINANCIAL INFORMATION. The Company's
historical financial information may not necessarily reflect the results of
operations, financial position and cash flows of the Company in the future or
the results of operations, financial position and cash flows had the Company
operated as a separate stand-alone entity during the periods presented.
RELIANCE ON MAJOR CUSTOMERS. Historically, Bestfoods' worldwide branded
foods business has been one of the Company's largest customers, accounting for
approximately 12.5% of total sales in 1997. The Company and Bestfoods have
entered into a two-year Master Supply Agreement, which sets forth the terms
under which the Company will sell its products to Bestfoods. In addition,
approximately 15% of the worldwide sales of the Corn Refining Business in 1997
represented sales of high fructose corn syrup to international, regional and
local companies engaged in the soft drink industry, primarily in North America.
If Bestfoods were not to continue to purchase products from the Company or the
Company's soft drink customers were to substantially decrease their purchases,
the business of the Company might be materially adversely affected.
INDEBTEDNESS. The Company is party to a $340 million credit facility with
a number of financial institutions (the "Credit Facility"). In addition, the
Company may incur additional indebtedness from time to time to meet working
capital requirements and for capital expenditures. In addition to creating debt
service obligations for the Company, the terms of the Credit Facility will
contain customary affirmative and negative covenants that will, among other
things, require the Company to satisfy certain financial tests and maintain
certain financial ratios.
The Company's ability to service this anticipated indebtedness will depend
on future operating performance, which will be affected by prevailing economic
conditions and financial and other factors, certain of which are beyond the
Company's control. If the Company were unable to service its indebtedness, it
would be forced to pursue one or more alternative strategies such as reducing
its capital expenditures, selling assets, restructuring or refinancing its
indebtedness or seeking additional equity capital (which may substantially
dilute the ownership interest of existing holders of Corn Products common
stock). There can be no assurance that any of these strategies could be
effected on satisfactory terms, if at all.
FORWARD-LOOKING STATEMENTS
This Form 10-K includes or may include certain forward-looking statements
that involve risks and uncertainties. This Form 10-K contains certain
forward-looking statements concerning the Company's financial position,
business strategy, budgets, projected costs and plans and objectives of
management for future operations as well as other statements including words
such as "anticipate," "believe," "plan," "estimate," "expect," "intend," and
other similar expressions. Although the Company believes its expectations
reflected in such forward-looking statements are based on reasonable
assumptions, stockholders are cautioned that no assurance can be given that
such expectations will prove correct and that actual results and developments
may differ materially from those conveyed in such forward-looking statements.
Important factors that could cause actual results to differ materially from the
expectations reflected in the forward-looking statements herein include
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<PAGE> 24
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 and market conditions in the
various geographic regions and countries in which the Company manufactures and
sells its products, including fluctuations in the value of local currencies;
costs or difficulties related to the establishment of the Company as an
independent entity; and increased competitive and/or customer pressure in the
corn refining industry. Such forward-looking statements speak only as of the
date on which they are made and the Company does not undertake any obligation
to update any forward-looking statement to reflect events or circumstances
after the date of this Form 10-K. If the Company does update or correct one or
more forward-looking statements, investors and others should not conclude that
the Company will make additional updates or corrections with respect thereto or
with respect to other forward-looking statements. See "Risk Factors" above.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Incorporated by reference from Annual Report, pages 14-31, sections
entitled "Independent Auditors' Report," and "Financial Statements."
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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<PAGE> 25
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information contained under the headings "Board of Directors,"
"Matters To Be Acted Upon - Election of Directors" and "Section 16(a)
Beneficial Ownership Reporting Compliance" in the Company's definitive proxy
statement for the Company's 1998 Annual Meeting of Stockholders (the "Proxy
Statement") and the information contained under the heading "Executive Officers
of the Registrant" in Item 1 hereof is incorporated herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information contained under the heading "Executive Compensation" in
the Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information contained under the heading "Security Ownership of Certain
Beneficial Owners and Management" in the Proxy Statement is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information contained under the heading "Certain Relationships and
Related Transactions" in the Proxy Statement is incorporated herein by
reference.
The Company believes the transactions described in this section contain
terms no less favorable then those obtainable from unaffiliated third parties.
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<PAGE> 26
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
Item 14(a)(1) Consolidated Financial Statements and Schedules
Incorporated by reference from Annual Report, pages 14-31, sections
entitled "Independent Auditors' Report," and "Financial Statements."
Item 14(a)(2) Financial Statement Schedules
All financial statement schedules have been omitted either because the
information is not required or is otherwise included in the financial
statements and notes thereto.
Item 14(a)(3) Exhibits
The Exhibits set forth in the accompanying Exhibit Index are filed as a
part of this report. The following is a list of each management contract or
compensatory plan or arrangement required to be filed as an Exhibit to this
report:
Exhibit Number
- --------------
10.9
10.10
10.11
10.12
10.13
10.14
10.15
10.16
10.17
10.18
Item 14(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter ended December
31, 1997.
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<PAGE> 27
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 28th day
of July, 1998.
CORN PRODUCTS INTERNATIONAL, INC.
By: *Konrad Schlatter
------------------------------------
Konrad Schlatter
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant, in the capacities indicated and on the 28th of July, 1998.
Signature Title
- --------- -----
*Konrad Schlatter Chairman and Chief Executive Officer
- -----------------------
Konrad Schlatter
/s/ James W. Ripley Chief Financial Officer
- -----------------------
James W. Ripley
/s/ Jack Fortnum Comptroller
- -----------------------
Jack Fortnum
*William C. Ferguson Director
- -----------------------
William C. Ferguson
*Bernard H. Kastory Director
- -----------------------
Bernard H. Kastory
*Samuel C. Scott Director
- -----------------------
Samuel C. Scott
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<PAGE> 28
*Alfred C. DeCrane, Jr. Director
- -----------------------
Alfred C. DeCrane, Jr.
*Richard G. Holder Director
- -----------------------
Richard G. Holder
*Ignacio Aranguren-Castiello Director
- ----------------------------
Ignacio Aranguren-Castiello
*William S. Norman Director
- ----------------------------
William S. Norman
*Clifford B. Storms Director
- ----------------------------
Clifford B. Storms
*By: /s/ Marcia E. Doane
----------------------------
Marcia E. Doane
Attorney-in-fact
(Being the principal executive officers, the principal financial and accounting
officers and a majority of the directors of Corn Products International, Inc.)
Page 26
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
2.1** Distribution Agreement dated December 1, 1997, between the
Company and Bestfoods
3.1* Amended and Restated Certificate of Incorporation of the
Company, filed as Exhibit 3.1 to the Company's Registration
Statement on Form 10, File No. 1-13397
3.2* Amended By-Laws of the Company, filed as Exhibit 3.2 to the
Company's Registration Statement on Form 10, File No. 1-13397
4.1* Rights Agreement dated November 19, 1997 between the Company
and First Chicago Trust Company of New York, filed as Exhibit 1 to
the Company's Registration Statement on Form 8-A12B, File No.
001-13397
4.2* Certificate of Designation for the Company's Series A Junior
Participating Preferred Stock, filed as Exhibit 1 to the Company's
Registration Statement on Form 8-A12B, File No. 001-13397
4.3** 5-Year Revolving Credit Agreement dated December 17, 1997 among
the Company and the agents and banks named therein
10.1** Master Supply Agreement dated January 1, 1998 between the
Company and Bestfoods
10.2** Tax Sharing Agreement dated December 1, 1997 between the
Company and Bestfoods
10.3** Tax Indemnification Agreement dated December 1, 1997 between
the Company and Bestfoods
10.4** Debt Agreement dated December 1, 1997 between the Company and
Bestfoods
10.5** Transition Services Agreement dated December 1, 1997 between
the Company and Bestfoods
10.6** Master License Agreement dated January 1, 1998 between the
Company and Bestfoods
</TABLE>
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<PAGE> 30
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
10.7* Employee Benefits Agreement dated December 1, 1997 between the
Company and Bestfoods, filed as Exhibit 4.E to the Company's
Registration Statement on Form S-8, File No. 333-43525
10.8** Access Agreement dated January 1, 1998 between the Company and
Bestfoods
10.9* Stock Incentive Plan of the Company, filed as Exhibit 4.E to
the Company's Registration Statement on Form S-8, File No.
333-43525
10.10** Deferred Stock Unit Plan of the Company
10.11** Form of Severance Agreement entered into by each of K.
Schlatter, S.C. Scott, E.J. Northacker, J.W. Ripley and F.J.
Kocun (the "Named Executive Officers")
10.12** Letter Agreement dated December 12, 1997 between the Company
and E.J. Northacker
10.13** Letter Agreement dated December 12, 1997 between the Company
and F.J. Kocun
10.14** Form of Indemnification Agreement entered into by each of the
members of the Company's Board of Directors and the Named
Executive Officers
10.15** Deferred Compensation Plan for Outside Directors of the Company
10.16** Supplemental Executive Retirement Plan
10.17** Executive Life Insurance Plan
10.18** Deferred Compensation Plan
13.1** 1997 Annual Report
21.1** Subsidiaries of the Company
23.1 Consent of KPMG Peat Marwick LLP
24.1** Powers of Attorney
</TABLE>
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<PAGE> 31
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <S>
27.1** Financial Data Schedule
27.2** Financial Data Schedule
27.3** Financial Data Schedule
</TABLE>
_________________
*Incorporated herein by reference.
**As previously filed in the Company's Form 10-K dated March 31, 1998.
Page 29
<PAGE> 1
Exhibit 23.1
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Corn Products International, Inc.
We consent to incorporation by reference in the Registration Statements on
Forms S-8 (No. 333-43479 and 333-43525) of Corn Products International, Inc. of
our report dated February 11, 1998, relating to the consolidated balance sheets
of Corn Products International, Inc. and Subsidiaries as of December 31, 1997
and 1996 and the related consolidated statements of income, stockholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 1997 which report is incorporated by reference in the December 31,
1997 annual report on Form 10-K of Corn Products International, Inc.
/s/ KPMG Peat Marwick LLP
March 31, 1998
Chicago, Illinois
