<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________
FORM 10-Q
____________
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934
FOR THE QUARTER ENDED JUNE 30, 1998
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 ROAD,
BEDFORD PARK, ILLINOIS 60501-1933
(Address of principal executive offices) (Zip Code)
(708) 563-2400
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
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 periods 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 AUGUST 7, 1998
Common Stock, $.01 par value 35,632,709 shares
<PAGE> 2
PART I FINANCIAL INFORMATION
ITEM I FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
( ALL FIGURES ARE IN MILLIONS EXCEPT PER SHARE AMOUNTS )
<TABLE>
<CAPTION>
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- ------------------
1998 1997 1998 1997
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Net sales $ 366.8 $ 357.5 $ 705.8 $ 694.6
Cost of sales 326.8 324.3 626.9 640.6
--------- --------- -------- --------
Gross profit 40.0 33.2 78.9 54.0
Operating expense 23.1 24.8 47.4 51.9
Restructuring charge 0.0 70.8 0.0 70.8
Spin-off costs 0.0 15.0 0.0 15.0
(Fees and income) from unconsolidated
subsidiaries (3.5) (0.3) (6.9) (1.9)
--------- --------- -------- --------
Operating income (Loss) 20.4 (77.1) 38.4 (81.8)
Financing costs 2.5 6.8 7.5 14.9
--------- --------- -------- --------
Income (Loss) before income taxes 17.9 (83.9) 30.9 (96.7)
Provision (benefit) for income taxes 6.5 (20.8) 10.8 (25.4)
--------- --------- -------- --------
11.4 (63.1) 20.1 (71.3)
Minority stockholders' interest 0.7 0.6 1.4 1.0
--------- --------- -------- --------
Net income (loss) $ 10.7 $ (63.7) $18.7 $ (72.3)
========= ========= ======== ========
Average common shares outstanding:
Basic 35.7 35.7 35.7 35.7
Diluted 36.0 35.7 36.0 35.7
Earnings (loss) per common share
Basic and Diluted: Net earnings per --------- --------- -------- --------
common share $ .30 $ (1.78) $ .52 $ (2.02)
========= ========= ======== ========
</TABLE>
See Notes To Condensed Consolidated Financial Statements
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM I FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
AS OF:
( ALL FIGURES ARE IN MILLIONS ) JUNE 30, DECEMBER 31,
1998 1997
---------- --------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 41 $ 85
Accounts receivable - net 209 182
Inventories 132 123
Prepaid expenses 19 13
Deferred tax asset 12 20
- --------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 413 423
- --------------------------------------------------------------------------------------------------
Investments in and loans to unconsolidated subsidiaries 106 168
Plants and properties - net 1,022 1,057
Other assets 21 18
- --------------------------------------------------------------------------------------------------
TOTAL ASSETS 1,562 1,666
==================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable 233 337
Accounts payable 80 90
Accrued liabilities 69 69
- --------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 382 496
- --------------------------------------------------------------------------------------------------
Noncurrent liabilities 38 37
Long - term debt 11 13
Deferred taxes on income 128 128
Minority stockholders' interest 9 6
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 - 35,617,709 and 35,597,360 issued
and outstanding on June 30, 1998 and
December 31, 1997, respectively 1 1
Additional paid in capital 1,020 1,020
Cumulative translation adjustment (46) (35)
Retained earnings 19 --
- --------------------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 994 986
- --------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 1,562 $ 1,666
==================================================================================================
</TABLE>
See Notes To Condensed Consolidated Financial Statements
<PAGE> 4
PART I FINANCIAL INFORMATION
ITEM I FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
(UNAUDITED)
(ALL FIGURES ARE IN MILLIONS ) THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------- -----------------
1998 1997 1998 1997
------- ------- ------ -------
<S> <C> <C> <C> <C>
Net Income (Loss) 11 (64) 19 (72)
Other comprehensive income/loss
Currency translation adjustment (7) (0) (11) (1)
------- ------- ------- -------
Comprehensive income 4 (64) 8 (73)
======= ======= ======= =======
</TABLE>
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(UNAUDITED)
PREFERRED COMMON ADDITIONAL CUMULATIVE RETAINED TOTAL
(ALL FIGURES ARE IN MILLIONS) STOCK STOCK PAID-IN TRANSACTION EARNINGS
CAPITAL ADJUSTMENT
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 $ 0 $ 1 $1,020 $ (35) $ 0 $986
Net income for the period 19 19
Translation adjustment (11) (11)
------------------------------------------------------------
Balance, June 30, 1998 $ 0 $ 1 $1,020 $ (46) $ 19 $994
============================================================
</TABLE>
See Notes To Condensed Consolidated Financial Statements
<PAGE> 5
PART I FINANCIAL INFORMATION
ITEM I FINANCIAL STATEMENTS
CORN PRODUCTS INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
( ALL FIGURES ARE IN MILLIONS ) FOR THE SIX MONTHS ENDED JUNE 30,
1998 1997
------------ --------------
<S> <C> <C>
CASH FLOWS FROM ( USED FOR ) OPERATING ACTIVITIES
Net income (loss) $19 $(72)
Non-cash charges (credits) to net income:
Depreciation 47 47
Restructuring and spin-off charges - 86
Deferred taxes 10 (11)
Other - net 4 1
Equity in earnings of unconsolidated affiliates 2 1
Changes in trade working capital:
Accounts receivable and prepaid items (35) 11
Inventories (10) 24
Due to CPC International, Inc. -- (33)
Accounts payable and accrued liabilities (9) (2)
- ---------------------------------------------------------------------------------------
Net cash flows from operating activities 28 52
- ---------------------------------------------------------------------------------------
CASH FLOWS FROM ( USED FOR ) INVESTING ACTIVITIES:
Capital expenditures paid (28) (47)
Proceeds from disposal of plants and properties 2 --
Investments in and loans to unconsolidated affiliates 60 (19)
- ---------------------------------------------------------------------------------------
Net cash flows from (used for) investing activities 34 (66)
- ---------------------------------------------------------------------------------------
Net cash flows after investments 62 (14)
- ---------------------------------------------------------------------------------------
CASH FLOWS FROM ( USED FOR ) FINANCING ACTIVITIES:
Net change in debt (106) --
Dividends to CPC International, Inc. -- (13)
Other liabilities ( deposits ) -- (8)
Increase (decrease) in transfer from CPC International, Inc., net -- 40
- ---------------------------------------------------------------------------------------
Net cash flows from ( used for ) financing activities (106) 19
- ---------------------------------------------------------------------------------------
Increase ( decrease ) in cash and cash equivalents (44) 5
Cash and cash equivalents, beginning of period 85 32
- ---------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $41 $37
=======================================================================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements
<PAGE> 6
CORN PRODUCTS INTERNATIONAL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL STATEMENTS
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, 1998 and 1997 and the financial position as of June 30,
1998 and December 31, 1997. The results for the three months and the six months
ended June 30, 1998 are not necessarily indicative of the results expected for
the year.
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 footnotes to these
statements contained in the Company's Annual Report to Stockholders that were
incorporated by reference in Form 10-KA for the fiscal year ended December 31,
1997.
2. ACCOUNTING PRONOUNCEMENTS
Effective for fiscal years beginning after December 15, 1997 the Financial
Accounting Standards Board issued Statement No. 130 (FAS 130), Reporting
Comprehensive Income. FAS 130 requires the reporting of comprehensive income in
addition to net income from operations. Comprehensive income is a more
inclusive financial reporting methodology that includes disclosure of certain
financial information that historically has not been recognized in the
calculation of net income. Other comprehensive income refers to revenues,
expenses, gains and losses that under generally accepted accounting principles
have previously been reported as separate components of equity such as currency
translation. The Company has adopted this reporting for the current year.
Also, in June 1997, FAS 131, "Disclosure About Segments of an Enterprise
and Related Information," was issued. This statement is currently in effect and
the Company is in compliance with the requirements of this pronouncement. The
Company is in one business segment - corn refining - and produces a wide variety
of products.
<TABLE>
<CAPTION>
3. INVENTORIES ARE SUMMARIZED AS FOLLOWS: June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Finished and in process.............................................. 69 51
Raw materials........................................................ 42 43
Manufacturing supplies............................................... 21 29
- ------------------------------------------------------------------------------------------------------------
Total inventories.................................................... 132 123
============================================================================================================
</TABLE>
<PAGE> 7
4. FINANCIAL INSTRUMENTS
COMMODITIES
Following the Company's policy of hedging its margin exposure to firm
priced business, it had open corn futures contracts of $142 million for delivery
of corn beyond June 30, 1998. Of the total commitment, $10 million is due in
September, 1998, $70 million is due in December, 1998, $51 million is due in
March, 1999, and $11 million is due April, 1999 through December, 1999. At June
30, 1998, the price of corn under these contracts was $9.1 million above market
quotations of the same date.
5. RESTRUCTURING CHARGES
In 1997, the Company recorded a $94 million pre-tax restructuring charge.
The restructuring charge includes the costs of the separation of facilities that
were used by CPC International, Inc. to produce both consumer foods and
corn-derived products. The majority of the restructuring is taking place in the
Company's international operations. The spin-off charge includes the direct
costs of the spin-off including legal, tax and investment banking fees. The
restructuring change is summarized below:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
$ Millions 1997 Charge To Be Utilized In
Charge Utilized Future Periods
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RESTRUCTURING CHARGES - NET
Employee costs....................................... 54 49 5
Plant and support facilities......................... 23 20 3
Other................................................ 17 12 5
- -----------------------------------------------------------------------------------------------------
Total................................................ 94 81 13
=====================================================================================================
</TABLE>
ITEM II
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998 WITH COMPARATIVE
FOR THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1997
On December 31, 1997, CPC International Inc. spun off its Corn Refining
Business as a separate independent company. The comparative financial
statements included in the report for the periods prior to January 1, 1998,
were prepared by attributing the historical data for the Corn Refining Business
of CPC International Inc. to the Company utilizing accounting policies
consistent with those applied in the preparation of CPC's historical financial
statements. Since the Corn Refining Business was operated as a division of CPC
in prior periods, such financial information and statements may not necessarily
reflect the consolidated results of operations or financial position of the
Company or what the results of operations would have been if the Company had
been an independent, public company during these periods.
<PAGE> 8
REPORTED RESULTS
Net sales for the quarter of $366.8 million were 2.6% higher than reported
last year based on volume gains principally in Other Operations. Pricing
improved in North America which was offset by lower pricing in certain product
categories and areas due to lower corn costs. Lower exchange also negatively
influenced sales. Year to date sales are up 1.6% on volume increases offset by
lower exchange rates.
Cost of Sales for the quarter are up 0.8% due to volume increases. Year
to date costs of sales are down 2.1% due to increased volumes offset by lower
corn costs and exchange rates.
Gross Profit for the quarter at $40.0 million or 10.9% of sales improved
$6.8 million from $33.2 million or 9.3% of sales. This improvement is due
primarily to improved selling prices and lower raw material costs. Year to
date gross profit at $78.9 million representing an 11.2% return on sales
improved $24.9 million from $54.0 million representing a 7.8% return on sales.
Improved pricing and lower raw material costs account for most of this change.
Operating Expenses at $23.1 million are 7% lower than the prior year of
$24.8 million for the quarter. Year to date operating expenses of $47.4
million are 9% lower than the $51.9 million of the prior year. Lower operating
expenses in local operations have more than offset the additional corporate
overhead required to operate on a stand-alone basis, which was not incurred
during the spin-off.
During the second quarter of 1997 the Company established a restructuring
reserve of $71 million and spin-off charges of $15 million to facilitate the
separation of facilities and operations that were used by CPC International,
Inc. This reserve of $71 million was increased to $94 million in the third
quarter of 1997. Charges to this reserve have been substantially completed
with approximately $13 million remaining in the reserve to be utilized for
outstanding items.
Fees and income from unconsolidated subsidiaries increased to $3.5 million
from $0.3 million for the quarter last year and year to date to $6.9 million
from $1.9 million last year. While fees have remained fairly stable the increase
is primarily attributable to results in the Mexican joint venture resulting from
improved margin and high fructose volumes in this operation.
Financing costs were down for the quarter $4.3 million as a result of
improved cash flow from better operating results and from the receipt of $60
million, during the first quarter, from a repayment of a loan made to our
Mexican joint venture. Year to date financing costs of $7.5 million are 50% of
the level of the prior year. Lower average debt levels as a stand-alone Company
and improved cash flows have resulted in this reduction.
The Company expects a 35% effective tax rate for 1998. The tax rate is
estimated based on the expected mix of domestic and foreign earnings for the
year. The change from the prior year is due to certain non-deductible charges
included in the restructuring expenses and a change in domestic and foreign
earnings streams previously reflected as part of CPC INTERNATIONAL, INC.
Net income for the quarter of $10.7 million or $0.30 per fully diluted
share compares to a loss last year of $63.7 million, or $(1.78) per share, which
included a one-time after-tax charge of $65 million for restructuring and
spin-off related costs from CPC International Inc. Excluding the spin-off and
restructuring charge, last year's results would have shown a $0.6 million
profit, or approximately $.02 per share.
For the six-month period, Corn Products earned $18.7 million, or $0.52 per
share compared to a loss of $72.3 million in 1997, or $(2.02) per share, or a
loss of $7.3 million excluding the special charge. Cumulative sales were $706
million compared to $695 million last year. Operating income was $38.4 million
versus a loss of $81.8 million or $4.0 million a year ago excluding the special
charge.
OPERATING HIGHLIGHTS ON A RESTATED BASIS
ACTUAL REPORTED RESULTS LAST YEAR INCLUDED OPERATIONS OUTSIDE NORTH AMERICA ON A
THREE-MONTH LAG BASIS. BEGINNING IN 1998, THE FINANCIAL YEAR FOR ALL UNITS WAS
CHANGED TO PUT THEM ON THE SAME DECEMBER YEAR-END BASIS. FOR COMPARATIVE
PURPOSES, THE OTHER OPERATIONS 1997 BUSINESS RESULTS WERE RESTATED TO PUT THEM
ON A COMPARABLE FISCAL YEAR-END BASIS. ALL FURTHER COMMENTS REFER TO THE
COMPARABLE FINANCIAL QUARTER AS SHOWN IN THE TABLE BELOW. ALL COMPARABLE
NUMBERS ALSO EXCLUDE SPECIAL CHARGES FOR 1997.
TABLE OF NET SALES AND OPERATING INCOME RESTATED FOR CHANGE IN YEAR END
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES
North America 237.1 228.9 439.5 425.9
Other Operations 129.7 129.4 266.3 259.8
------ ------ ------ ------
366.8 358.3 705.8 685.7
Adjustments for fiscal year end 0.0 (0.8) 0.0 8.9
------ ------ ------ ------
Total 366.8 357.5 705.8 694.6
====== ====== ====== ======
OPERATING INCOME
North America 4.4 (8.4) 4.8 (29.8)
Other Operations 18.4 21.8 38.5 39.6
Corporate (2.4) 0.0 (4.9) (2.2)
------ ------ ------ ------
20.4 13.4 38.4 7.6
Adjustments for fiscal year end 0.0 (4.7) 0.0 (3.6)
------ ------ ------ ------
20.4 8.7 38.4 4.0
Restructuring Charges and Spin-off
Costs 0.0 85.8 0.0 85.8
------ ------ ------ ------
Total 20.4 (77.1) 38.4 (81.8)
====== ====== ====== ======
</TABLE>
<PAGE> 9
THE FOLLOWING DISCUSSION COMMENTS UPON CHANGES BETWEEN THE PERIODS 1998 AND
1997 AS RESTATED.
TOTAL COMPANY net sales increased 2.4% for the quarter based on a gain of
3% in volumes, while year-to-date they were up 2.9% with an advance in volumes
of 6%. Lower exchange rates have affected dollar sales by 5% this year.
Cost of sales increased 1% to $326.8 million compared to the comparable
quarter last year. The increase in volumes accounts for the higher cost of
sales. Gross profit for the quarter improved to $40.0 million or 10.9% of sales
from $33.8 million or 9.4% of sales. This improvement is primarily due to the
improved selling prices and lower raw material costs.
On a comparable basis, Operating income for the quarter was up to $20.4
million from $13.4 million last year. For the year-to-date, the increase was to
$38.4 million from $7.6 million.
NORTH AMERICA sales advanced 4% in the quarter on a 1% increase in volume,
as selling prices improved for high fructose corn syrup and glucose corn syrup.
Dextrose volumes declined slightly due to poor export demand and competitive
pressure in the domestic market. US pricing for the most part remained
unchanged with the exception of an increase for fructose and glucose. Canadian
sales in US dollars were down because of the deteriorating exchange rate and
some lower local currency pricing. Selling prices for grain related business
declined in both countries due to the lower corn cost. Overall, "spread", or
net sales less raw material cost, improved, as net corn cost declined while
prices improved. Results in the United States have improved substantially over
last year, but are still close to break-even, because high fructose corn syrup
prices remain well below historic levels, despite improved capacity utilization
rates. Canadian results maintained their positive rate despite the almost 6%
decline in the exchange rate since last year. The Mexican joint venture
improved sharply on strong volumes and better pricing.
OTHER OPERATIONS showed sales at last year's level despite weak exchange
rates in a number of countries, and some price declines related to lower corn
cost. Volumes were up 7% for the quarter as strong increases in high maltose
corn syrup for the brewing industry compensated for some declines in traditional
products. The economies of various countries were affected by the situation in
Asia, which also spilled over to Latin America. The somewhat unfavorable
product mix, with its lower overall margin caused a 16% decline in operating
income. Brazilian results continue to be impacted by the economic slowdown
experienced in the fourth quarter of last year, while results in Argentina,
Pakistan, and Colombia remain strong.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, the Company's total assets declined to $1,562 million from
$1,666 million at December 31, 1997. This decline was the result of the
repayment of a $60 million loan made by the Company to Arancia CPC, S.A. de
C.V., its joint venture in Mexico. The proceeds from the loan, along with cash,
were used to repay $90 million of short-term debt in the United States. An
increase in seasonal working capital needs offset positive operating cash flows
from earnings and depreciation.
The Company has a $340 million 5-year revolving credit facility in the
United States due December 2002. The six-month $98 million Canadian bridge loan
due June 1998 was extended to December 31, 1998 and reduced to $62 million. In
addition, the Company has a number of short-term credit facilities consisting of
operating lines of credit. There is sufficient borrowing capacity under the
U.S. revolver to repay the Canadian bridge loan.
<PAGE> 10
At June 30, 1998, the Company has total debt outstanding of $243 million.
The debt outstanding consisted of $90 million drawn from the unsecured revolving
credit facility in the United States at a rate of 5.9% and $103 million drawn on
various Canadian operating lines at a rate of 5.3%. The remaining borrowings
were drawn against the various other local country operating lines at a weighted
average of 14.2%.
For the six-month period, capital expenditures totaled $28 million as
compared to $47 million for the same period last year. The lower spending level
reflects the lower capital needs as the Company's major capital expenditure
program of the last several years was substantially completed.
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 Company expects to complete all necessary
modifications by August of 1999. The project has completed the assessment phase
and extended testing has been initiated. The estimated cost to complete the
testing is approximately $3 million to $4 million. Costs to upgrade existing
hardware and programs could add an additional $2 to $3 million to this project.
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.
FORWARD-LOOKING STATEMENTS
This Form 10-Q includes or may include certain forward-looking statements
that involve risks and uncertainties. This Form 10-Q 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
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-Q. 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.
ITEM III
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
<PAGE> 11
PART II OTHER INFORMATION
ITEM: 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Stockholders on Wednesday, May 20, 1998.
Of the 35,652,134 shares of common stock outstanding on the record date, there
were present, either in person or by proxy, 30,253,344 shares. The following
matters were submitted to a vote of security holders:
1. The following directors were elected for a three-year term expiring in
2001:
<TABLE>
<CAPTION>
FOR WITHHELD
<S> <C> <C>
William C. Ferguson 29,969,516 283,828
Bernard H. Kastory 29,973,913 279,431
Samuel C. Scott 29,977,898 275,446
</TABLE>
Directors whose term of office continued after the meeting are as follows:
Ignacio Aranguren-Castiello, Alfred C. DeCrane, Jr., Richard G. Holder,
William S. Norman, Konrad Schlatter and Clifford B. Storms.
2. The Corn Products International, Inc. 1998 Stock Incentive Plan (the
"Plan") was submitted for approval by the stockholders for the purpose of
(i) qualifying certain grants of options as "incentive stock options"
within the meaning of Section 422 of the Internal Revenue code of 1986, as
amended (the "Code") and (ii) permitting future stock options and
performance shares granted under the Plan to qualify as "qualified
performance-based" compensation under Section 162(m) of the Code. Of the
shares entitled to vote, 21,246,633 voted for the Plan, 5,708,321 voted
against and 239,611 abstained. Broker non-votes totaled 3,058,779 shares.
3. The approval and ratification of Indemnification Agreements for Directors
and Officers was also submitted for approval by the stockholders. This
proposal sought approval and ratification of the indemnification agreements
the Company has entered into with its current directors, officers and
certain other key executives and consultants of the Company as well as any
future director, nominee for director or officer. Of the shares entitled
to vote, 29,334,442 voted for approval and ratification, 695,404 voted
against and 223,498 abstained. There were no broker non-votes on this
proposal.
4. Ratification of the appointment of KPMG Peat Marwick as independent
auditors for the Company for 1998 was also submitted for approval by the
stockholders. Of the shares entitled to vote, 30,164,202 voted for the
appointment of KPMG, 40,731 voted against and 48,411 abstained. There were
no broker non-votes on this proposal.
ITEM: 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits pursuant to Item 601 of Regulation S-K.
Exhibits required by Item 601 of Regulation S-K are listed in the
Exhibit Index hereto.
b) Reports on Form 8-K.
On May 13, 1998, a report was filed which was the first quarter earnings
press release dated April 21, 1998
<PAGE> 12
CORN PRODUCTS INTERNATIONAL, INC.
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: June 14, 1998
/s/ James Ripley
------------------------------------------
James Ripley
Chief Financial Officer
DATE: June 14, 1998
/s/ Jack Fortnum
------------------------------------------
Jack Fortnum
Comptroller - Principal Accounting Officer
<PAGE> 13
EXHIBIT INDEX
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
11 Statement re: computation of earnings per share
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 11
EARNINGS PER SHARE
CORN PRODUCTS INTERNATIONAL, INC.
COMPUTATION OF NET INCOME
PER SHARE OF CAPITAL STOCK
(UNAUDITED)
<TABLE>
<CAPTION>
(ALL FIGURES ARE IN MILLIONS EXCEPT PER SHARE DATA) THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1998 JUNE 30, 1998
------------------ ----------------
<S> <C> <C>
Average shares outstanding - Basic 35.6 35.6
Effect of dilutive securities:
Stock options 0.4 0.4
------------------ ----------------
Average share outstanding - Assuming dilution 36.0 36.0
================== ================
Income from continuing operations 10.7 18.7
Net income 10.7 18.7
Income per share - Basic and Dilutive
Continuing operations .30 .52
Net income .30 .52
</TABLE>
10Q-14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 41
<SECURITIES> 0
<RECEIVABLES> 209
<ALLOWANCES> 0
<INVENTORY> 132
<CURRENT-ASSETS> 413
<PP&E> 2,194
<DEPRECIATION> 1,172
<TOTAL-ASSETS> 1,562
<CURRENT-LIABILITIES> 382
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 1,020
<TOTAL-LIABILITY-AND-EQUITY> 1,562
<SALES> 706
<TOTAL-REVENUES> 0
<CGS> 627
<TOTAL-COSTS> 674
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7
<INCOME-PRETAX> 31
<INCOME-TAX> 11
<INCOME-CONTINUING> 20
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19
<EPS-PRIMARY> $0.52
<EPS-DILUTED> $0.52
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 37
<SECURITIES> 0
<RECEIVABLES> 200
<ALLOWANCES> 0
<INVENTORY> 136
<CURRENT-ASSETS> 389
<PP&E> 2,150
<DEPRECIATION> 1,090
<TOTAL-ASSETS> 1,640
<CURRENT-LIABILITIES> 305
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 992
<TOTAL-LIABILITY-AND-EQUITY> 1,640
<SALES> 695
<TOTAL-REVENUES> 0
<CGS> 641
<TOTAL-COSTS> 693
<OTHER-EXPENSES> 86
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15
<INCOME-PRETAX> (98)
<INCOME-TAX> (25)
<INCOME-CONTINUING> (71)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (72)
<EPS-PRIMARY> $(2.02)
<EPS-DILUTED> $(2.02)
</TABLE>
