<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995 COMMISSION FILE NUMBER 1-4199
CPC INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-2385545
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
INTERNATIONAL PLAZA, P.O. BOX 8000
ENGLEWOOD CLIFFS, N.J. 07632-9976
(Address of principal executive office) (Zip Code)
(Registrant's telephone number, including area code) 201-894-4000
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Name of each exchange
Title of each class on which registered
------------------- ---------------------
8 1/2% sinking fund
debentures, due April 15, 2016 New York
-----------------------------------------------------------------
New York Geneva
Chicago London
Common Stock Pacific Paris
par value $.25 per share Basle Zurich
Frankfurt
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
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 information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K /X/
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Aggregate market value
Outstanding at held by non-affiliates of the
Class January 31, 1996 registrant at January 31, 1996
- ---------------------------- ---------------- ------------------------------
<S> <C> <C>
Common stock, par value $.25 145,672,415 $10,597,668,191
</TABLE>
DOCUMENTS INCORPORATED BY REFERENCE
1. Portions of registrant's Annual Report to Stockholders for year ended
December 31, 1995 are incorporated into Part I and Part II hereof.
2. Portions of the registrant's Proxy Statement dated March 13, 1996 are
incorporated into Part III hereof.
<PAGE> 2
PART I
ITEM 1. BUSINESS.
CPC International Inc. and its consolidated subsidiaries (the "Company")
is a worldwide group of businesses, principally engaged in three major industry
segments: consumer foods, baking and corn refining. The development of the
Company's business since the beginning of 1995 and financial information on
business segments and geographical divisions are described in the 1995 Annual
Report to Stockholders (the "Annual Report"), the following portions of which
are incorporated herein by reference:
- Business Review on pages 6 and 7.
- Text on pages 8 through 15 for "Consumer Foods Business" under the
headings "Best Foods Division", "CPC Europe Consumer Foods", "CPC
Latin America Consumer Foods", and "CPC Asia Consumer Foods".
- Text on page 16 under the heading "CPC Baking Business".
- Text on pages 18 and 19 under the heading "Corn Refining Business".
- Management's Discussion and Analysis of Financial Condition and
Results of Operations on pages 24 through 27.
- Financial Statements and Notes to Consolidated Financial Statements
on pages 29 through 45.
The Company employs approximately 52,500 people of whom approximately
35,600 are located outside the United States. Total employee costs amounted to
$1.6 billion in 1995 compared with $1.4 billion and $1.3 billion in 1994 and
1993, respectively.
The Company's products are manufactured from various agricultural raw
materials including soybean and other vegetable oils, peanuts, corn and wheat,
all of which are, and are expected to continue to be, in adequate supply. As
prices of these materials depend upon a number of unpredictable factors, such
as, farm plantings and weather, which cannot always be fully protected through
hedging, fluctuations in raw material prices may have an effect on the
Company's earnings.
The Company's products are manufactured and sold primarily by the sales
organizations of its various operating units and subsidiaries. Exports
represent a small portion of total net sales. Mayonnaise sales accounted for
11.5 percent, 11.3 percent and 11.7 percent of consolidated net sales in 1995,
1994 and 1993, respectively.
The Company has approximately 1,940 trademarks, some of which are of
significant importance to the Company, particularly in the consumer foods and
baking businesses. The Company also has over 1,650 patents of various
durations, some of which are licensed to affiliates and joint ventures in which
the Company or an affiliate participates. No individual patent has a material
effect on the earnings of the Company.
The Company's products, both within the United States and abroad,
generally face strong competition, and as a result, the Company engages in
extensive marketing, advertising and promotional activities, particularly with
respect to its consumer products. The Company also conducts continuous market
research to assist in determining consumer preferences. The amount spent on
these activities was $833 million in 1995, $712 million in 1994, and $643
million in 1993.
1
<PAGE> 3
In addition, the Company conducts product and process research and
development activities. Research related to food and food technology is
conducted at facilities in Somerset, New Jersey, Bay Shore, New York,
Heilbronn, Germany, and Thayngen, Switzerland, and corn refining research and
product support activities are provided from facilities at Argo, Illinois and
Beloit, Wisconsin.
Research has resulted in the development of new and improved products
based on studies in nutrition, food technology, vegetable oils, enzymes,
carbohydrates, and carbohydrate-derived products, as well as developments and
improvements in process technology. The amount spent for research and
development in 1995, 1994, and 1993 was $70 million, $58 million, and $49
million, respectively. Research and development expenditures increased by $12
million in 1995 reflecting mostly additional spending for consumer foods
research. Approximately 730 full-time professional employees were engaged in
such activities during 1995.
The Company operates in 63 countries, and accordingly, operations are
subject to varying degrees of political risk and uncertainty. Loss of earnings
from any one country other than the United States and Germany would not have a
material adverse effect on the Company as a whole. Also, because of its
diversity, the Company is subject to fluctuations in foreign currencies which
could affect earnings. As a practical matter it is not feasible to cover these
fluctuations with currency hedges. However, the Company does maintain a policy
to hedge its exposure to foreign currency cash flows.
ITEM 2. PROPERTIES.
The Company's headquarters buildings in Englewood Cliffs, New Jersey are
held under a lease which, including all renewal terms, expires in May 2019.
The Company owns or leases other property appropriate to its business,
including distribution centers and warehouses. None of the leases involved are
considered to be a material lease.
The Company has a total of 158 operating plants, of which 42 are in the
United States, 7 in Canada, 43 in Europe, 19 in Africa and the Middle East, 30
in Latin America and 17 in Asia. In addition, the Company has interests in
joint ventures in Latin America which operate five plants (corn refining
products).
Of the Company's 158 plants, 114 plants are engaged solely in the
manufacture of consumer food products, 25 are engaged solely in the manufacture
of baking products, 18 are engaged in the manufacture of corn refining
products, 6 of which also produce consumer food products; and 1 plant is
engaged in the manufacture of other products. In general, it is the Company's
belief that its plants are suitable and adequate for its needs, and, subject to
fluctuations in market demand, are fully utilized.
Included on the following page is a complete listing of all plants owned
and operated by the Company and its consolidated subsidiaries as of December
31, 1995. Based on past loss experience, the Company believes it is adequately
insured in respect of these assets, and for liabilities which are likely to
arise from its operations.
2
<PAGE> 4
THE CONSUMER FOODS FACILITIES ARE AS FOLLOWS:
UNITED STATES:ARKANSAS-Little Rock; ILLINOIS-Argo, Chicago, Franklin Park;
INDIANA-Indianapolis; NORTH CAROLINA-Asheboro; NEW JERSEY-Bayonne, Jersey City;
NEW YORK-Bronx; TEXAS-Irving; WISCONSIN-Germantown, Milwaukee (2); PUERTO
RICO-Arecibo
CANADA:ONTARIO-Cardinal; QUEBEC-Baie d'Urfe, Pointe Claire(2)
EUROPE:AUSTRIA-Wels; CZECH REPUBLIC-Zabreh; DENMARK-Frederiksberg, Levring,
Vadum; FRANCE-Duppigheim (2), Faverolles, Grande Synthe, Ludres (Nancy),
Velluires, Verneuil; GERMANY-Auerbach, Bremen, Cloppenburg, Heilbronn, Krefeld,
Krumbach, Munchen, Reinbek, Stavenhagen, Wittingen; GREECE-Schimatari;
HUNGARY-Roszke; IRELAND-Dublin; ITALY-Sanguinetto; NETHERLANDS-Baarn,
Loosdrecht; POLAND-Poznan (2), Torun; PORTUGAL-Carregado; SPAIN-Martorell;
SWEDEN-Simrishamn; SWITZERLAND-Carouge, Thayngen; UNITED
KINGDOM-Burton-on-Trent, Crumlin, Erith, Lifton, Paisley, Redditch
LATIN AMERICA:ARGENTINA-Barracas, Florida, Mendoza, Pilar, Tucuman; BRAZIL,
Campina Grande, Garanhuns, Itatiaia, Pouso Alegre; COLOMBIA-Barranquilla (2),
Cali; COSTA RICA-Ala Juela; DOMINICAN REPUBLIC-Santo Domingo;
MEXICO-Aguascalientes, Aguida, Lerma; PERU-Callao; URUGUAY-San Carlos;
VENEZUELA-Maracay, Valencia
AFRICA & MIDDLE EAST:ISRAEL-Arad, Arara, Hadera, Haifa, Zefat; KENYA-Nairobi,
MOROCCO-Casablanca; SAUDI ARABIA-Yanbu; SOUTH AFRICA-Cape Town, Durban (2),
East London, Estcourt, Klerksdorp, Tarlton, Vryheid; TURKEY-Cayirova, Kartal
ASIA:CHINA-Beijing, Conghua; HONG KONG-Tai Po; INDIA-Dharwad, Thane;
INDONESIA-Purwakarta; MALAYSIA-Kuala Lumpur; PAKISTAN-Pernawan; PHILIPPINES-Las
Pinas, Paranaque; SOUTH KOREA-Suwon; SRI LANKA-Kothalawala; TAIWAN-Hsin Chu
Hsien; THAILAND-Bangpoo, Gateway City
THE BAKING BUSINESS FACILITIES ARE AS FOLLOWS:
UNITED STATES:CALIFORNIA-Montebello, Placentia, San Francisco, Tulare;
COLORADO-Denver; CONNECTICUT-Greenwich; FLORIDA-Miami, Riviera Beach;
ILLINOIS-Northlake; MARYLAND-Frederick; NORTH CAROLINA-Gastonia; NEW
JERSEY-Totowa; NEW YORK-Albany (2), Bay Shore (2), Hudson, Plattsburg;
OREGON-Beaverton; PENNSYLVANIA-Hazleton; TEXAS-Dallas; VERMONT-Burlington;
WASHINGTON-Seattle; WISCONSIN-Oconomowoc
Europe:UNITED KINGDOM-Bristol
THE CORN REFINING FACILITIES ARE AS FOLLOWS:
UNITED STATES:CALIFORNIA-Stockton; ILLINOIS-Argo; NORTH CAROLINA-Winston-Salem
CANADA:ONTARIO-Cardinal, London, Port Colborne
LATIN AMERICA:ARGENTINA-Baradero*, Rio Segundo; BRAZIL-Balsa Nova, Cabo*,
Mogi-Guacu*; CHILE-Llay-Llay*; COLOMBIA-Barranquilla, Cali*, Medellin
ASIA:MALAYSIA-Petaling Jaya; PAKISTAN-Faisalabad*
AFRICA:KENYA-Eldoret
The OTHER PRODUCTS facility which produces enzymes is located in Beloit,
Wisconsin.
- -----------
*Indicates corn refining plant that also produces consumer food products.
3
<PAGE> 5
ITEM 3. LEGAL PROCEEDINGS.
In previous reports concerning the site of a former subsidiary, Ott
Chemical Company, located in Muskegon, Michigan, the Company reported that it
had been held liable under the Comprehensive Environmental Response,
Compensation and Liability Act, in a 1991 decision by the U.S. District Court
for the Western District of Michigan. The Company also previously reported
that on July 14, 1995, the U.S. Court of Appeals for the Sixth Circuit reversed
the District Court's finding of liability against the Company and that
following such reversal, the Court of Appeals directed an en banc rehearing of
this decision. The rehearing was held on December 6, 1995 and the Company is
currently awaiting the decision.
As previously reported by the Company, in July, 1995 the Company received
a Federal grand jury subpoena in connection with a Justice Department antitrust
investigation of U.S. corn refiners in the marketing of high fructose corn
syrup and other "food additives" (the investigation of the Company relates only
to high fructose corn syrup). The Company is complying with the grand jury
subpoena. The Company, as a high fructose corn syrup producer, has also been
named as one of the defendants in a number of private treble damage class
actions, by direct and indirect customers, alleging violations of federal and
state antitrust laws. No class of customers in such actions has yet been
certified.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable.
EXECUTIVE OFFICERS OF THE REGISTRANT
Set forth below are the names and ages of all elected officers of the
Registrant, as of December 31, 1995, indicating their positions and offices
with the Registrant and the period during which each has served as such:
<TABLE>
<CAPTION>
All positions and offices
Name Age with the Registrant
---- --- -------------------------
<S> <C> <C>
Charles R. Shoemate 56 Chairman of the Board since September 1990;
Chief Executive Officer since August 1990;
President since October 1988;
Vice President, 1984 - October 1988 and
Director since October 1988.
Robert J. Gillespie 53 Executive Vice President since July 1995;
Senior Vice President November 1991 - July
1995; Vice President 1981 - November 1991
and Director since October 1988.
Alain Labergere 61 Executive Vice President since July 1995;
Senior Vice President November 1991 - July
1995; Vice President January 1991 - November
1991 and Director since December 1992.
Konrad Schlatter 60 Chief Financial Officer since July 1993;
Senior Vice President since April 1990;
Vice President since 1987, Comptroller
1981-1987.
</TABLE>
4
<PAGE> 6
<TABLE>
<S> <C> <C>
Clifford B. Storms 63 Senior Vice President since October 1988;
Vice President, 1973 - October 1988;
and General Counsel since 1975.
Angelo S. Abdela 53 Vice President since 1990; Treasurer 1981-
1995.
Richard P. Bergeman 57 Vice President since 1982.
Michael J. Bevilacqua 56 Vice President since 1992.
Charles Feldberg 62 Vice President since 1984.
Gordon F. Granger 58 Vice President since 1990.
Gale L. Griffin 52 Vice President since 1995.
Heribert H. Grunert 51 Vice President since 1995.
Lawrence K. Hathaway 51 Vice President since 1990.
James E. Healey 54 Vice President since 1995; Comptroller -
1987-1995.
Hanes A. Heller 55 Vice President since 1995.
Bernard H. Kastory 50 Vice President since 1992.
Axel C.A. Krauss 51 Vice President since 1992.
Fred C. Meendsen 62 Vice President since 1984; retired
January 31, 1996.
Eugene J. Northacker 54 Vice President since 1992.
Luis Schuchinski 58 Vice President since 1995.
John W. Scott 60 Vice President since 1985.
Samuel C. Scott 51 Vice President since 1991.
Mohammed M. Wahby 60 Vice President since 1995.
James W. Ripley 52 Comptroller since 1995.
John B. Meagher 59 Secretary since 1981.
</TABLE>
All officers serve at the pleasure of the Board of Directors.
5
<PAGE> 7
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
Information regarding the Company's common stock and market prices for
each quarterly period during the past two years is set forth on pages 46 and 47
of the Annual Report and is incorporated herein by reference.
The approximate number of equity stockholders as of December 31, 1995 was
29,230.
The history of the Company's dividends declared for the last two years on
pages 46 and 47 of the Annual Report is incorporated herein by reference.
ITEM 6. SELECTED FINANCIAL DATA.
Selected financial data for the eleven years ended December 31, 1995 for
the Company, as set forth on pages 46 and 47 of the Annual Report, is
incorporated herein by reference.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Management's discussion and analysis of financial condition and results of
operations of the Company for the three years ended December 31, 1995, is set
forth on pages 24 through 27 of the Annual Report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The financial statements comprising the consolidated balance sheets at
December 31, 1995 and 1994, and the consolidated statements of income,
stockholders' equity and cash flows, and notes to financial statements for each
of the years in the three year period ended December 31, 1995 are set forth on
pages 29 through 45 of the Annual Report.
Selected quarterly financial data for the years ended December 31, 1995 and
December 31, 1994, set forth on pages 46 and 47 of the Annual Report is
incorporated herein by reference.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.
Not applicable.
6
<PAGE> 8
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Company's Proxy Statement dated March 13, 1996 (the "1996 Proxy
Statement") has been filed pursuant to Regulation 14A and is incorporated
herein by reference. Information regarding directors of the registrant is set
forth on pages 18 through 24 of the 1996 Proxy Statement under the caption
"Election of Directors". Information regarding executive officers of the
registrant is set forth on pages 4 and 5 of this report.
ITEM 11. EXECUTIVE COMPENSATION.
Information regarding executive compensation is set forth on pages 13
through 16 of the 1996 Proxy Statement under the caption "Executive
Compensation and Stock Ownership Tables".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
Information regarding security ownership of certain beneficial owners and
management is set forth on pages 16 and 17 of the 1996 Proxy Statement under
the caption "Stock Ownership Table".
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Not applicable.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
a) Financial Statements - See index on page 8.
b) Reports on Form 8-K - There were two reports filed on Form 8-K during
the fourth quarter of 1995.
c) Exhibits - Exhibits to this report are filed as part of this report as
set forth in the Index to Exhibits on pages 11 and 13 hereof.
7
<PAGE> 9
INDEX TO FINANCIAL STATEMENTS
1. FINANCIAL STATEMENTS
The consolidated financial statements and reports of the independent
auditors are included in Part II of this report through incorporation by
reference from the Annual Report which is enclosed as Exhibit 13. The
documents referred to above can be found on the following pages in the
Annual Report.
<TABLE>
<CAPTION>
Annual Report
-------------
Page
----
<S> <C> <C>
a) Independent auditors' report 28
b) Consolidated balance sheets as of December 31,
1995 and 1994 30 - 31
c) Consolidated statements of income for the years
ended December 31, 1995, 1994 and 1993 29
d) Consolidated statements of cash flows for the
years ended December 31, 1995, 1994 and 1993 32
e) Consolidated statements of stockholders' equity for
the years ended December 31, 1995, 1994 and 1993 33
f) Notes to financial statements 34 - 45
</TABLE>
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.
8
<PAGE> 10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on the 19th day of
March, 1996.
CPC INTERNATIONAL INC.
----------------------------------
By /S/ Charles R. Shoemate
-----------------------------------
Charles R. Shoemate, Chairman,
President 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 and in the capacities indicated, on the 19th day of March, 1996.
<TABLE>
<CAPTION>
Signature Title
--------- -----
<S> <C>
/S/ Charles R. Shoemate Chairman, President, and Chief
- --------------------------------- Executive Officer
(Charles R. Shoemate)
/S/ Konrad Schlatter Senior Vice President and Chief
- --------------------------------- Financial Officer
(Konrad Schlatter)
/S/ James W. Ripley Comptroller and Chief Accounting
- --------------------------------- Officer
(James W. Ripley)
/S/ Theodore H. Black * Director
- ---------------------------------
(Theodore H. Black)
/S/ Alfred C. DeCrane, Jr. * Director
- ---------------------------------
(Alfred C. DeCrane, Jr.)
/S/ William C. Ferguson * Director
- ---------------------------------
(William C. Ferguson)
</TABLE>
9
<PAGE> 11
<TABLE>
<S> <C>
/S/ Robert J. Gillespie * Director
- ---------------------------------
(Robert J. Gillespie)
/S/ Ellen R. Gordon * Director
- ---------------------------------
(Ellen R. Gordon)
/S/ George V. Grune * Director
- ---------------------------------
(George V. Grune)
/S/ Leo I. Higdon, Jr. * Director
- ---------------------------------
(Leo I. Higdon, Jr.)
/S/ Richard G. Holder * Director
- ---------------------------------
(Richard G. Holder)
/S/ Eileen S. Kraus * Director
- ---------------------------------
(Eileen S. Kraus)
/S/ Alain Labergere * Director
- ---------------------------------
(Alain Labergere)
/S/ William S. Norman * Director
- ---------------------------------
(William S. Norman)
* /S/ John B. Meagher
--------------------------------
(John B. Meagher)
Attorney-in-Fact
</TABLE>
10
<PAGE> 12
INDEX TO EXHIBITS
Exhibit No.
- -----------
3(a) The Certificate of Incorporation as restated April 22, 1993 is
incorporated by reference to Exhibit 3(a) of Form 10-K for the year
ended December 31, 1993.
3(b) The By-Laws as amended on September 21, 1993 are incorporated by
reference to Exhibit 3(b) of Form 10-K for the year ended December
31, 1993.
4(a) No instruments defining rights of holders of debt securities are
included as exhibits because each authorized issue of debt securities
is less than 10% of total assets. The Company agrees that it will
furnish a copy of any such instrument upon request.
4(b) Rights Agreement dated March 19, 1991 between the Company and First
Chicago Trust Company of New York is incorporated by reference to
Exhibit 4(b) of Form 10-K for the year ended December 31, 1991.
10(a) The 1984 Stock and Performance Plan is incorporated by reference from
Exhibit A to the prospectus contained in Post-Effective Amendment No.
1 to the Registration Statement on Form S-8, File No. 2-92248.
10(b) The 1993 Stock and Performance Plan is incorporated by reference to
the Registration Statement filed on Form S-8, File No. 33-49847.
10(c) Deferred Compensation Plan for Outside Directors and Retirement
Income Plan for Outside Directors:
i) The Deferred Compensation Plan for Outside Directors, as
amended and restated effective May 1, 1994 is incorporated by
reference to Exhibit 10(c)i of Form 10-K for the year ended December
31, 1994.
ii) The Retirement Income Plan for Outside Directors as amended
September 21, 1993, is filed herewith as Exhibit 10(c)ii.
10(d) Employment agreements for those directors and the five most highly
compensated executive officers who have such contracts, including
amendments thereto. Employment agreement for Mr. C.R. Shoemate dated
January 2, 1986, is incorporated by reference to Exhibit 10(c) of
Form 10-K for the year ended December 31, 1988, along with amendments
dated January 19, 1989, February 21, 1989, and January 21, 1992 are
incorporated by reference to Exhibit 10(c) of Form 10-K for the year
ended December 31, 1991. Employment agreement for Mr. R.J.
Gillespie, dated January 2, 1986, as amended, is incorporated by
reference to Exhibit 10(c) of Form 10-K for the year ended December
31, 1988. Amendments dated January 19, 1989 and February 21, 1989
are incorporated by reference to Exhibit 10 (c) of Form 10-K for the
year ended December 31, 1992.
11
<PAGE> 13
10 (d) Employment agreement for Mr. C.B. Storms dated January 2, 1986, along
with amendments dated November 21, 1986, September 20, 1988, February
13, 1989, and February 21, 1989 are incorporated by reference to
Exhibit 10(c) of Form 10-K for the year ended December 31, 1989.
Employment agreement for Mr. K. Schlatter, dated January 2, 1986,
along with amendments dated November 21, 1986, November 13, 1987,
September 20, 1988, February 21, 1989 and July 5, 1990 are
incorporated by reference to Exhibit 10(c) of Form 10-K for the year
ended December 31, 1992.
10 (e) Indemnification agreements for all directors and five most highly
compensated executive officers who have such contracts are
incorporated by reference to Exhibit 10(d) of Form 10-K for the year
ended December 31, 1986.
10 (f) Deferred Compensation Plan for senior executives, dated November 10,
1988 is incorporated by reference to Exhibit 10(e) of Form 10-K for
the year ended December 31, 1988.
10 (g) Special Severance Program for Salaried Employees, dated January 17,
1989 is incorporated by reference to Exhibit 10(f) Form 10-K for the
year ended December 31, 1988. An amendment dated March 19, 1991 to
the Special Severance Program for Salaried Employees is incorporated
by reference to Exhibit 10 (f) of Form 10-K for the year ended
December 31, 1991.
10 (h) Deferred Stock Unit Plan for senior executives, dated December 20,
1994, is incorporated by reference to Exhibit 10(h) of Form 10-K for
the year ended December 31, 1994.
10 (i) Executive Life Insurance Plan and amendment No.1 related thereto are
incorporated by reference to Exhibit 10(i) of Form 10-K for the year
ended December 31, 1994.
11 Schedule of computation of earnings per share filed herewith.
12 Statement regarding the computation of ratios of earnings to fixed
charges is filed herewith.
13 1995 Annual Report to Stockholders is filed herewith. Except for such
parts thereof as are expressly incorporated by reference in this Form
10-K, this exhibit is furnished for the information of the Securities
and Exchange Commission and is not deemed filed as a part hereof.
Graphic material contained in the Annual Report is not included in
the electronic filing of this report.
21 Subsidiaries of the Registrant
Filed herewith.
23 Consent of Independent Auditors
Filed herewith.
12
<PAGE> 14
24 Powers of Attorney
Filed under separate cover with the Commission.
27 Financial Data Schedule
Filed herewith.
13
<PAGE> 1
CPC INTERNATIONAL INC.
RETIREMENT INCOME PLAN FOR OUTSIDE DIRECTORS
1. Purpose and Eligibility
The purpose of the CPC International Inc. Retirement Income Plan for
Outside Directors (the "Plan"), is to encourage incumbent directors of CPC
International Inc. (the "Company") to continue to stand for reelection to
the Board of Directors of the Company (the "Board"), and to attract and
retain qualified new directors, by providing income to eligible directors
upon their retirement from the Board.
Eligible directors are directors who (a) are not otherwise entitled
to receive a pension from the Company, or any of its subsidiaries, and (b)
have completed at least five years of service as directors at the time of
their retirement.
The term "retirement" means termination of service as a director of
the Company for any reason.
2. Amount of Retirement Income
The Company will pay to an eligible director retirement income in
U.S. dollars at an annual rate equivalent to the yearly cash retainer in
effect for directors on the date of retirement, payable commencing on the
first day of the month coincident with or next following date of
retirement.
3. Duration of Retirement Income
The amount of retirement income set forth in paragraph 2 will be paid
during the life of the eligible director, but in no event after the
expiration of a period equal to the number of years and months of service
on the Board by such director.
<PAGE> 2
4. Frequency of Retirement Income Payments
Payments of retirement income shall be made quarterly. The
Administrative Committee may approve an alternative method of payment, but
in no event shall retirement income be paid in a lump sum.
5. Death Benefits
No benefits shall be payable under the Plan upon the death of a
director either before or after retirement.
6. Administration
The Plan shall be administered by the Compensation and Nominating
Committee (the "Committee") of the Board of Directors. The members of the
Committee shall be appointed by the Board.
Except as otherwise expressly provided herein, the Committee shall
have full power and authority to construe the Plan, to determine all
questions arising in the administration of the Plan, and to adopt such
rules, regulations and procedures as it may deem necessary for the proper
and efficient administration of the Plan.
7. Grantor Trust
The Company may establish a trust with an independent trustee, which
shall be a bank or trust company selected by the Company, and transfer to
the trustee of that trust shares of Common Stock of the Company, cash or
other assets in order to assist the Company in fulfilling its payment
obligations hereunder. The governing trust instrument shall require the
trustee to establish a separate account in the trust fund for each
director and shall contain such other provisions as the Company may deem
necessary or appropriate to carry out the purposes of such trust.
<PAGE> 3
8. Non-Assignability
The rights and interests of a director hereunder may not be assigned,
pledged or otherwise transferred except by will or the laws of descent and
distribution.
9. Amendments and Termination
The Board may at any time amend or terminate the Plan. No amendment
or termination shall alter or impair benefits accrued at the time of such
amendment or termination.
10. General Matters
Retirement income under the Plan will be paid at the dates and in the
manner provided for in Section 2 from the assets of the grantor trust
established under Section 7 and, to the extent the assets therein are not
sufficient or such a trust has not been established, from the general
assets of the Company. Prior to such payment a director will have no
interest under the Plan in any specific asset of the Company or any
security interest in the assets of a grantor trust established under
Section 7.
All expenses incurred in administering the Plan and a grantor trust
established under Section 7 will be paid by the Company.
Adopted: January 1, 1983
Amended: March 15, 1988
September 21, 1993
<PAGE> 1
EXHIBIT 11
SCHEDULE OF COMPUTATION OF EARNINGS PER SHARE
(IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
FOR THE YEAR-END DECEMBER 31,
PRIMARY 1995 1994 1993
------- ---- ---- ----
<S> <C> <C> <C>
Net income $512,055 $345,086 $454,470
-------- -------- --------
Preferred stock dividends, net of taxes 11,125 10,921 10,673
-------- -------- --------
Net income available to common
stockholders $500,930 $334,165 $443,797
======== ======== ========
Weighted average shares outstanding 146,057 148,371 150,398
-------- -------- --------
PRIMARY EARNINGS PER SHARE (*) $3.43 $2.25 $2.95
======== ======== ========
FULLY DILUTED
-------------
Net income $512,055 $345,086 $454,470
-------- -------- --------
Adjustments to net income:
Assumed additional cost if
ESOP shares are fully converted net
of certain tax benefits (3,178) (3,386) (4,121)
After tax interest on the 6% zero
coupon convertible debt -- -- 3,869**
-------- -------- --------
Fully diluted net income $508,877 $341,700 $454,218
-------- -------- --------
Average shares outstanding 146,057 148,371 150,398
Add incremental shares representing:
Shares issuable upon exercise of
stock options based on year-end
price 791 426 257
Performance incentive shares
issuable based on year-end
market price 164 88 80
Shares assumed issuable upon
conversion of ESOP shares 4,267 4,342 4,384
Shares assumed issuable upon
conversion of 6% zero coupon
convertible debt -- -- 1,458**
-------- -------- --------
Weighted average number of shares
as adjusted 151,279 153,227 156,577
======== ======== ========
FULLY DILUTED EARNINGS PER SHARE $3.36 $2.23 $2.90
======== ======== ========
Dilutive effect of incremental shares -1.9% -1.0% -1.7%
======== ======== ========
</TABLE>
(*) Incremental shares have not been considered in the computation of primary
earnings per share in accordance with generally accepted accounting
principles which requires inclusion only when dilutive effect is greater
than three percent.
(**)Redeemed August 13, 1993.
14
<PAGE> 1
EXHIBIT 12
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
($MILLIONS)
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31,
1995 1994 1993 1992 1991
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
INCOME BEFORE INCOME TAXES $ 877.0 $ 614.7 $ 790.3 $ 744.5 $ 693.5
- -------------------------- -------- ------- ------- ------- -------
Add (subtract):
Portion of rents
representative of interest 26.3 25.3 20.9 21.7 20.2
Interest on bonds
mortgages & similar debt 55.2 51.9 56.1 64.7 73.6
Other interest 86.5 54.6 53.7 51.0 54.3
Interest expense included
in cost of plant construction (6.6) (6.2) (6.7) (6.4) (9.2)
Income of Unconsolidated Venture -- 3.9 -- 5.4 --
-------- ------- ------- ------- -------
Income as adjusted $1,038.4 $ 744.2 $ 914.3 $ 880.9 $ 832.4
======== ======= ======= ======= =======
FIXED CHARGES:
- --------------
Portion of rents representative
of interest $ 26.3 $ 25.3 $ 20.9 $ 21.7 $ 20.2
Interest on bonds, mortgages &
similar debt 55.2 51.9 56.1 64.7 73.6
Other interest 86.5 54.6 53.7 51.0 54.3
-------- ------- ------- ------- -------
$ 168.0 $ 131.8 $ 130.7 $ 137.4 $ 148.1
======== ======= ======= ======= =======
RATIO OF EARNINGS TO FIXED CHARGES 6.2 5.6 7.0 6.4 5.6
======== ======= ======= ======= =======
</TABLE>
15
<PAGE> 1
CPC INTERNATIONAL INC. 3
BEST FOODS DIVISION
Innovation and brand extension ... ethnic markets ... foodservice ... higher
advertising and marketing spending: these are the key elements of Best Foods'
strategy for faster growth in the highly competitive North American market.
INNOVATION AND BRAND EXTENSION
Increased innovation in North America over the last several years has produced
five important break-through products, each of which takes its brand into new or
expanded competitive territory.
Hellmann's and Best Foods ONE STEP DRESSINGS entered the market in 1994,
providing convenience for preparing great-tasting coleslaw, tuna, and potato
salads. The One Step dressings line has captured a strong leading market share
in its first 18 months.
Hellmann's and Best Foods LOW FAT MAYONNAISE DRESSING, introduced in early
1995, has successfully addressed consumers' concern about fat. With only one
gram of fat per serving and superior taste, it has easily out-distanced the
competition, helping increase the brands' overall market share by a share point.
CPC's light and low fat products together account for 26% of total brand volume.
CPC's most recent entry under the Hellmann's and Best Foods brands is a line
of seven POURABLE DRESSINGS, launched in January 1996. These promising products
are leveraging CPC's great brand reputation, excellent taste, and high quality
and are expected to carve out a significant place in the growing pourables
category. The strategic acquisitions of the Henri's and Western dressings
businesses in 1993 and 1994, respectively, provided marketplace experience and
production capacity for the pourables launch.
REDUCED FAT SKIPPY PEANUT BUTTER SPREAD, now in its third year on the market,
has captured a 40% share of the reduced fat peanut butter segment, slowing a
decline in the overall category. This product's success as an alternative to
regular peanut butter is expected to rise with increased marketing support.
The Knorr brand, a longtime market leader in Europe and Latin America, is
beginning to come into its own in North America. Extending beyond the
traditional Knorr soups, sauces, and bouillons, CPC has developed highly
convenient KNORR CUP PRODUCTS (soups, pasta, and meals).
<PAGE> 2
4 CPC INTERNATIONAL INC.
Introduced over the past two years, these products provide quick, light, and
satisfying meals or snacks that are perfect for today's on-the-go consumers.
ETHNIC MARKETS
The U.S. Hispanic market offers additional opportunities for the Knorr brand,
and for CPC's Mazola oil business. Knorr bouillons and Mazola corn oil have been
basic to Latin American cooking for decades, maintaining their place in the home
as these consumers have established new lives in the U.S. Sales and volumes to
Hispanic consumers of both of these products increased significantly in 1995.
FOODSERVICE
Foodservice is an arena of great potential for Best Foods, with its advantages
of premium brands and access to CPC's successful European foodservice
experience. The division is investing aggressively in promotion, advertising,
sales force development, and customer relations to leverage its special
advantages in this fast-growing industry.
MARKETING
Significant cost reductions throughout the Best Foods business are expected to
support strongly increased marketing investments in 1996.
<PAGE> 3
CPC INTERNATIONAL INC. 5
CPC EUROPE CONSUMER FOODS
As CPC Europe continues to rely on its deeply rooted local organizations for
quick action and entrepreneurial initiative, it is at the same time quickly
"Europeanizing" its business in step with the dramatic structural and
competitive changes taking place across the region.
A pan-European perspective now drives divisional activity in virtually every
area of the business: product innovation, operations, geographic extension,
acquisition activity, technology, purchasing, and organizational development.
The objective is to take advantage of our size (CPC is the fifth largest food
company in Europe) and the flexibility and extendability of our businesses,
while maintaining CPC's time-tested local market power.
THE EUROPEANIZATION OF CPC EUROPE'S CORE PRODUCTS
Knorr soups, sauces, bouillons, and related products, with sales of about $2
billion, make up CPC Europe's largest business, holding No. 1 or No. 2 market
shares in virtually every country. This local leadership, together with
expertise developed over many decades, fuels our Knorr brand business today in
the introduction of a new generation of innovative, cost-efficient products that
can be quickly extended beyond their home countries. Knorr Spaghetteria pasta
dishes, new in 1995, are an excellent recent example of a winner with
multi-market potential. The line won a leading share of Germany's large
quick-cook market during its first year.
The Knorr brand is also a uniquely effective vehicle for CPC's thrust into
totally new markets. It led our entry into eastern and central Europe over the
last several years and in 1995 was successfully extended into Israel.
CPC's Pfanni potato products, under the Knorr brand in some markets, are
entering new countries from their original markets of Germany, Austria, and
Italy. Potato products have great potential in eastern Europe and through CPC's
Caterplan foodservice operations. Acquired in 1994, Pfanni made a significant
contribution to
<PAGE> 4
6 1995 ANNUAL REPORT
German earnings in 1995. The 1995 acquisition of the $100 million Pot Noodles
business in the U.K. added a brand highly compatible with Knorr and well suited
for extension to new markets.
CPC's dressing business has achieved virtually complete European coverage
through two major 1995 initiatives. Already successful in most of Europe, CPC
dressings now compete in the two "missing" countries at the heart of the
continent. Lesieur dressings added strong positions in mayonnaise and pourable
dressings in France. The aggressive launch of Hellmann's mayonnaise in Germany
is in progress, buoyed by nearly universal trade acceptance.
Moving rapidly eastward, the Hellmann's brand was earlier launched in
Hungary, Poland, the Czech and Slovak Republics, and Russia, all new countries
for CPC within the last five years.
CPC Europe's large desserts business continues to create ever more convenient
products for quick desserts and snacking. For example, Alsa "Express" products
significantly reduce preparation time of flans, a major desserts category in
France. In ready-to-eat desserts, CPC rejuvenated its entire Yabon range in
France and, in the U.K., strengthened the Ambrosia range with new single-serve
varieties.
CPC is accelerating the double-digit growth of its Caterplan foodservice
business, which had sales of more than $700 million in 1995, via enhanced
convenience, new technology, greater service to the chef, and geographic
extension.
RESTRUCTURING FOR EFFICIENCY ACROSS EUROPE
CPC's 1994-95 restructuring program in Europe has included shifting production
of some products, updating several plants, and shutting down two others,
resulting in cross-border efficiency and significant savings for reinvestment in
marketing.
ADDED POWER IN AFRICA AND THE MIDDLE EAST
In CPC Europe's Africa/Middle East division, four 1995 acquisitions expanded
operations and opportunities: B & B Baking (pretzels) in Israel; Capamarka rice
flour in Turkey; Spitiko filo pastry dough in Greece; and Fine Foods (sauces,
dressings, desserts) in South Africa. In 1995, CPC entered Jordan through a
joint venture.
<PAGE> 5
CPC INTERNATIONAL INC. 7
CPC LATIN AMERICA CONSUMER FOODS
A nearly 70-year track record of successful operations is CPC's critical
advantage in Latin America, as the U.S. food industry wakes up to the
opportunities offered by 400 million consumers living in generally more stable
and prosperous economies.
CPC entered Argentina in 1928, extended into Brazil, Mexico, and Colombia
over the next five years, and today posts Latin American consumer foods sales of
over $1 billion from 13 countries. While other U.S. food companies are making
their first forays into the region, CPC is leveraging decades of experience,
affordable products in tune with local eating habits, leading market positions,
and tested staying power. These advantages position us for continued growth, as
standards of living rise, new consumers flood into the money economy, the trade
becomes more sophisticated, and branded products continue to represent safety,
quality, and status.
AN EXEMPLARY YEAR IN LATIN AMERICA
1995 has been an exemplary year for CPC Latin America, in both senses of the
word.
First, the division's results were outstanding, with sales and earnings
growing 11% and 28%, respectively. Over the past five years, earnings have grown
at a compound annual growth rate of 20% in the region.
Second, the year's combination of economic events, with sharp currency
devaluations in Mexico and recovery in Brazil, perfectly exemplifies the
diversity of challenges and opportunities we know to expect and know how to
handle in the region. The old adage truly fits in Latin America: the only
surprise is no surprise.
The year was also marked by a new flow of advantages from market unification.
Although the positive impact of the North American Free Trade Agreement is being
delayed by Mexico's downturn, other free trade regions (the Andean and Mercosur
groups) are beginning to see important new benefits. For CPC, the removal of
trade barriers allows previously impossible efficiencies in plant operations,
sourcing, and marketing, as well as cross-border product extensions.
1995 HIGHLIGHTS
- - Volumes grew robustly. We recorded especially strong volume gains by
Hellmann's mayonnaise in Argentina and Knorr bouillons in Brazil.
- - Knorr children's soups were launched in Mexico and Argentina, targeting young
families.
- - Stand-up pouches of Hellmann's mayonnaise in several countries offer consumers
a less expensive product, thus shielding CPC's Hellmann's business from
lower-priced competitive products.
- - CPC's Basic Nutritious Foods business
(chiefly foods from cereals) continued its expansion via new products. Maizena
Nutre cereal blend for children was launched in Brazil during 1995, following
introductions over the last several years of Cremavena cereal, a mix of oat
flakes and corn starch in Peru, and Maizena Polenta in Uruguay.
- - In Argentina, CPC's unique AdeS soy-based beverages grew about 20% in 1995 to
about $20 million in sales. AdeS beverages have been launched in Uruguay as a
first step in broad regional extension.
- - CPC's Caterplan foodservice business grew more than 40% in response to sharply
increased focus. The division is drawing strongly on CPC's European Caterplan
experience to seize leader-ship in this undeveloped food industry sector.
- - Our joint venture with General Mills, International Dessert Partners,
developed a line of dessert products for launch in 1996.
<PAGE> 6
8 CPC INTERNATIONAL INC.
CPC ASIA CONSUMER FOODS
An extraordinary opportunity to introduce CPC products to millions of new
consumers is galvanizing our business in Asia. In the world's fastest growing
regional economy, CPC Asia has mounted an aggressive campaign to establish our
brands quickly in new markets and capture market share ahead of competition.
Now in its 39th year of Asian operations, CPC has businesses in 13 countries,
including joint ventures in eight markets, as well as a licensing agreement in
Japan on sales of more than $600 million. Knorr bouillons and soups and CPC's
mayonnaise and peanut butter products hold strong positions in the region. Sales
increased strongly in 1995 to $364 million, nearly double their level in 1990.
From this strong base we're driving for even faster growth, by moving quickly
in the emerging markets of China, India, Indonesia, Sri Lanka, and Vietnam, and
by building our more established businesses. Asian profits are largely being
reinvested to develop our organization and facilities. CPC has built five plants
in four countries in the past two years.
KNORR BOUILLONS IN CHINA
Our strongest focus is on China, a giant untapped market in the midst of an
historic economic transformation. Since China lacks the infrastructure to
support a nationwide business, we're developing regional businesses with local
partners. In 1994 we began producing bouillons in Guangzhou in the south. In
1995 we opened a plant in Beijing in the north and established a third China
joint venture, in Shanghai in the east. These fast-growing regions have a
combined population of 400 million people.
Each business is marketing Knorr bouillons, perfect for preparing the soups
and broths common to Chinese cuisines. Small packs of Knorr cubes are affordable
to consumers and retailers and are easy to stock in small shops. This
combination makes bouillon a winner for establishing the brand, as CPC has
proven over generations in Asia, Latin America, and Europe.
<PAGE> 7
1995 ANNUAL REPORT 9
The Beijing plant will also make dressings for newly-arrived Western
fast-food restaurants. While home use of commercial dressings is not widespread,
we expect this segment to grow as CPC's foodservice business helps shape the
"eating out" habits of Chinese consumers.
OTHER EMERGING MARKETS
CPC Asia envisions "Our Products Enjoyed in Every Home Every Day." Including
China, CPC now operates in countries home to 92% of Asia's more than three
billion people. One third of this population has adequate income to purchase our
products, suggesting both the opportunity at hand and the growth yet to come.
In 1995 CPC's new business in Vietnam focused its efforts on
specially-formulated Knorr bouillons imported from Thailand. We also began
producing Knorr bouillons in Indonesia and launched the brand in India.
BUILDING EXISTING BUSINESSES
While expanding in new markets, CPC continued to build its established
businesses by more closely aligning new products with local cuisines. Among
Knorr products, we introduced chili sauce in Malaysia; Cup Jok instant rice
porridge in plastic cups in Thailand; liquid garlic seasoning in the
Philippines; and pastes and sauces for Caterplan foodservice. We've more than
tripled our Caterplan sales in the past five years, and continue to develop new
products and to take this dynamic business into new markets.
We also added pourable dressings in Malaysia and flexible packs for
mayonnaise and sandwich spreads in the Philippines and Thailand. Also in
Thailand, we launched a Best Foods brand version of sankaya, a sweet bread
spread made from eggs and coconut milk.
<PAGE> 8
10 CPC INTERNATIONAL INC.
CPC BAKING BUSINESS
CPC's baking business made a quantum leap forward in 1995, acquiring Entenmann's
sweet baked goods and three other leading brands to create the nation's No. 1
fresh premium baking company. Prior to the acquisition, CPC's baking business
was healthy and profitable. But in a rapidly consolidating and increasingly
competitive baking industry, the acquisition gives CPC an array of new
opportunities to speed volume and profit growth through synergies in
distribution, production, and new product development.
The new CPC Baking Business has annual sales of approximately $1.5 billion
and claims some of the best brand franchises in the industry. The roster
includes the four businesses acquired in October - Entenmann's sweet baked
goods, Freihofer's sweet baked goods and breads, Oroweat breads, and Boboli
Italian bread shells - as well as Thomas' English muffins, Arnold and Brownberry
breads and rolls, and Sahara pita breads. All compete in the growing premium
segment of the baking industry.
The combined business has one of the best direct-to-store delivery systems in
the industry. This network allows CPC both to increase distribution efficiency
and to reach new markets. For example, since the acquisition, Thomas' English
muffins have been extended into new markets in the Pacific Northwest and Denver,
Colorado.
SWEET BAKED GOODS
The Entenmann's brand is the leader in the U.S. among fresh, sweet baked goods
and is the 14th largest U.S. grocery brand in terms of dollar sales. It has a
strong leading share in the fat-free segment, which the brand pioneered in 1989.
Entenmann's reduced fat products were added in 1995, broadening the brand's
"better for you" assortment. Fat free and reduced fat products account for a
third of the brand's sales, offering a key growth opportunity.
Another growth initiative is international expansion. The first Entenmann's
bakery outside the U.S. was opened in the United Kingdom in 1995 and is now
delivering cakes and pastries to the leading retailers there.
ENGLISH MUFFINS
CPC's Thomas' English muffins, with their distinctive nooks and crannies, are
No. 1 in the market. The Thomas' line now includes seven varieties, including
cranberry and blueberry flavors added in 1995. Also during the year, CPC
extended its successful Sandwich Size muffins into new markets, along with its
reformulated Thomas' bagels, helping increase sales and volumes. CPC also
markets Thomas' Sahara pita bread, the nation's No. 1 pita. A salsa pita was
launched last year.
SLICED BREADS, ROLLS
CPC has four major regional brands of breads and rolls: Arnold, Brownberry,
Freihofer's, and Oroweat. Each is among the leaders in its primary markets. To
accelerate growth, CPC takes innovations developed at one bakery and moves it to
others. For example, the Oroweat brand, No. 1 on the West Coast, developed
Master's Best super premium breads made from whole grains. In 1996 a full line
of Master's Best products will be launched on the West Coast and, under the
Brownberry brand, in the Midwest.
BREAD SHELLS
Boboli bread shells were launched in 1988, creating a new category. Consumers
can combine Boboli bread shells, Boboli pizza sauces, a few simple ingredients,
and a dash of creativity to make "homemade" pizza and other meals.
<PAGE> 9
CPC INTERNATIONAL INC. 11
CORN REFINING BUSINESS
CPC's Corn Refining Business showed solid progress in 1995, overcoming higher
corn costs, increased competition, and the effect of the severe devaluation of
the Mexican peso on Latin American economies.
1995 sales at $1.2 billion were essentially flat, but operating income rose
3.3% to $214 million. The results were affected by two significant changes in
the make-up of the business: the sale of Pekin Energy Company, an
ethanol-producing joint venture with Texaco that did not fit within the core
focus of our business; and the conversion of CPC's Mexican corn refining
operation into a joint venture. Excluding the effect of these changes, corn
refining sales rose 5.9%, on good volume growth, and operating income rose 5.7%.
The only corn refiner with operations in North America and throughout Latin
America, CPC is uniquely positioned to benefit from recent open market
agreements, including the North American Free Trade Agreement and regional trade
pacts within Latin America. CPC also has interests in eight other countries,
chiefly in Africa and Asia, through technical and management service agreements
operated by its Cooperative Management Group.
By leveraging strong local management teams and decades of experience, CPC's
Corn Refining Business profitably extends products around the world. Guiding
these activities is a five-part strategic plan for growth. We discuss our five
core strategies and our 1995 activities below.
LEVERAGE AND GROW LEADING MARKET POSITIONS AND STRATEGIC RELATIONSHIPS
To build on our U.S. market leadership in dextrose, Corn Products, the North
American division, invested in its Argo, IL, dextrose facility to expand
capacity, further improve quality, and lower costs. At the London, Ontario,
plant, a high fructose corn syrup (HFCS) expansion was completed. And in Latin
America, CPC expanded production of high maltose syrup in Brazil, Colombia, and
Argentina. High maltose, opening a major business opportunity for CPC in the
region, was perfected for use in the brewing industry by CPC people from Brazil
as well as Canada and the U.S.
To accelerate business growth, CPC also formed strategic relationships, such
as our joint venture in Mexico with a former competitor, Arancia, S.A. de C.V.
The new business is now building an HFCS plant in Mexico to meet the demand
created by the soft drink industry's conversion from sugar to HFCS. In India we
established a know-how and technical licensing agreement with Anil Starch Co.,
that country's largest corn refiner.
IMPROVE AND EXPAND POSITIONS IN VALUE-ADDED AND DIFFERENTIATED PRODUCTS
CPC expanded its successful line of carrier starches for corrugators in the
U.S., and began exporting them to CPC businesses in Latin America and Asia. Corn
Products, in close cooperation with the Latin American consumer division, also
developed a dispersible starch for use in new quick-cook consumer products.
CONTINUOUSLY DRIVE FOR DELIVERED COST LEADERSHIP
In 1995 CPC benefited from two new co-generation facilities in Canada, which
provide low-cost power, and from a new, highly-efficient corn oil extraction
facility at Argo, IL. In Latin America, costs were lowered in a variety of ways,
including closing an operation in Honduras, restructuring labor pacts in
Argentina and Chile,
<PAGE> 10
12
and consolidating the sourcing of products and raw materials in markets
throughout the region. The rebuild of the plant in Colombia, initiated in 1995,
will bring additional cost savings by making the facility far more efficient.
DELIVER QUALITY PRODUCTS AND SERVICES THAT ARE VALUED BY OUR CUSTOMERS
Corn Products conducts surveys to monitor its customers' needs and identify new
business opportunities. This technique has been adopted by CPC's other major
corn refining affiliates.
IMPROVE INDIVIDUAL AND TEAM EFFECTIVENESS TO ACHIEVE OUR MISSION
Corn Products' Total Quality Excellence program, now being adapted by other CPC
units, includes employee training and team building. Corn Products also
implemented training in valuing differences as part of its commitment to
diversity in the work force.
<PAGE> 11
CPC INTERNATIONAL INC. 13
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
CPC International Inc. and Subsidiaries
OVERVIEW OF 1995 AND OUTLOOK FOR 1996
CPC International's primary objective continues to be to improve shareholder
value through focused development of its three businesses: consumer foods,
baking, and corn refining. The Company's strategy for its consumer foods
business is to pursue worldwide sales, volume, and profit growth in its core
products: Knorr soups, sauces, bouillons, and related products; dressings; and
foodservice. For the baking and corn refining businesses, CPC's strategy is to
maximize their return through a combination of improving profitability and
investing selectively for growth; additionally, the corn refining business's
strength will be leveraged through strategic relationships.
In line with these strategies, during 1995 the Company focused on volume
growth; introduced many new products in all of its three businesses and
throughout the world; trebled the size of its baking business through a large
acquisition and also acquired several smaller consumer foods businesses in
Europe and Asia; expanded and built production facilities; and commenced action,
including a charge to earnings, for the integration of its existing baking
business with the acquired one. Solid earnings growth resulted from these
activities. Earnings were also affected by the following events: European
currency values in 1995, compared to the prior year, were favorable for most of
the year; in North America's consumer foods and baking businesses, continued
consumer concerns about fat consumption held back demand in several important
product categories, while high commodity costs restrained margins in these
businesses as well as in the corn refining business; and in the Latin American
region, Brazil's economic environment improved notably, while the opposite was
true for Mexico and Venezuela, also impacting CPC's operations.
Our earnings expectations for 1996 are based on the assumption that
conditions relating to consumption, costs, currency values, competition, and
political and social environments in the economies and industries in which CPC
operates will not change significantly overall. Our expectations are also based
on the assumption that economies in most areas of the world will continue to
progress at current, generally modest, rates of growth. More specifically:
- In the U.S. it is expected that economic growth will remain at a level
similar to 1995. It is likely that this will benefit the Company, as will
increased offerings of reduced and low fat products and other new products.
Continuing high agricultural commodity prices may moderate 1996 earnings growth,
particularly in the corn refining business.
- Also in the U.S., the step-by-step combination over the next 24 months of
the Company's existing and acquired baking businesses should result in synergies
during 1996 that are expected to contribute towards profits.
- In Europe the economies are expected to continue their generally modest
growth with some continuing weakness in the south. Currency values on average in
1996 are likely to be lower than their 1995 levels. Competition will continue
strong as the European Union's food manufacturers and retail trade continue to
seek efficiencies. These factors will continue to have a moderating effect on
the division's volume, sales, and profit growth. CPC's leading brands, wide
geographic presence, and its new products and businesses are expected to provide
the needed strength to counteract these forces.
- In Latin America the continuing devaluation during 1995 of the Mexican
currency is expected to moderate in 1996 and result in an improving economic
climate. However, the negative effect this event had on the region is not
expected to reverse quickly and should continue to hold back growth investments
during 1996. On the other hand, freer markets and open borders have led to
higher regional business activity that should continue to benefit income and
consumption levels. CPC, with its strong market positions throughout the area,
is expected to show continued progress in 1996.
- In Asia economic growth in 1996 is expected to remain fair. Because the
Company's products have relatively low market penetration in most countries in
that area, CPC continues to see important opportunities for strong growth in its
businesses there.
- The worldwide restructuring program initiated in 1994 will continue to be
implemented during 1996. The resulting cost benefits from greater efficiencies
are expected to enhance CPC's competitive position, particularly in Europe and
North America.
Should some of these factors prove to be materially different from our
expectations, earnings could be
<PAGE> 12
14 1995 ANNUAL REPORT
correspondingly affected.
The last three years' financial results are discussed below. A general
description of operations appears on pages 2 through 21 of this report.
RESULTS OF OPERATIONS: 1995 COMPARED TO 1994
NET SALES in 1995 increased 14% over the previous year to $8.4 billion with
consumer foods accounting for 74% of the overall increase and the baking
business making up the difference. Volumes, including acquisitions, were 9.1%
higher, contributing strongly to the sales gain. Acquisitions increased sales by
$390 million or 5.3%. Consumer foods sales rose 13% to $6.5 billion on volume
gains of 6.2%, favorable exchange rates, and better prices. Sales in Europe
increased 17% on stronger currency values and volume gains, with acquisitions
contributing importantly. In North America, volumes were off 2% but better
prices resulted in a sales gain of 2%. In Latin America, sales advanced 11% on
higher volumes. Asian sales rose more than 30%, chiefly due to the new
businesses in that region and the consolidation of a Korean joint venture, which
had previously been reported on an equity basis. Baking business sales advanced
60% to $675 million, including $272 million of additional sales from the
acquired baking business. Corn refining sales remained flat at $1.2 billion as
volume gains were offset by the elimination of sales of the Mexican business
which was converted into a joint venture early in the year. Lower selling prices
also reduced sales.
COST OF SALES AND OPERATING EXPENSES. Cost of sales as a percentage of net
sales was approximately 60% in 1995, resulting in a gross profit margin of
nearly 40%, slightly better than the 39.5% in 1994. The improvement reflects the
benefits of restructuring existing businesses and better prices, which more than
offset higher raw material costs. Marketing expenses, as a percentage of net
sales, increased slightly from last year. The ratio of selling, general, and
administrative expenses to sales also increased marginally, reflecting mostly
the increase in amortization of goodwill from recent acquisitions.
RESTRUCTURING, INTEGRATION, AND OTHER CHARGES -- NET. In the third quarter of
1995, the Company recorded a pre-tax charge of $75 million for the further
restructuring of its worldwide businesses, a program initiated in 1994.
Offsetting this charge was a pre-tax gain of $72 million from the sale of two
businesses: an ethanol joint venture in the United States and a small
insecticide business in Brazil. In addition, in the fourth quarter of 1995 the
Company recorded a pre-tax charge of $55 million for the integration of its
recently acquired baking business with its existing baking business. In 1994,
the Company recorded a pre-tax charge of $227 million for the cost of a
worldwide restructuring program designed to ensure competitiveness through the
rest of the decade. The net impact of these special items on operating income,
net income, and earnings per common share is summarized below:
<TABLE>
<CAPTION>
1995
- ----------------------------------------------------------------------------------
Excluding
Reported Special special
$ Millions except per share amounts results items items
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING INCOME
Consumer foods $ 800 $ (40) $ 840
Baking (14) (55) 41
Corn refining 251 37 214
Corporate expenses (30) -- (30)
- ----------------------------------------------------------------------------------
Total $1,007 $ (58) $1,065
- ----------------------------------------------------------------------------------
NET INCOME $ 512 $ (36) $ 548
- ----------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE $ 3.43 $(.24) $ 3.67
- ----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
1994
- ----------------------------------------------------------------------------------
Excluding
Reported Special special
$ Millions except per share amounts results items items
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING INCOME
Consumer foods $ 562 $(175) $ 737
Baking (10) (33) 23
Corn refining 188 (19) 207
Corporate expenses (28) -- (28)
- ----------------------------------------------------------------------------------
Total $ 712 $(227) $ 939
- ----------------------------------------------------------------------------------
NET INCOME $ 345 $(137) $ 482
- ----------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE $ 2.25 $(.92) $ 3.17
- ----------------------------------------------------------------------------------
</TABLE>
OPERATING INCOME, excluding the special items mentioned above, increased 14%
derived primarily from higher volumes in all segments. Consumer foods, excluding
its portion of the special items, advanced 14% on good volume gains in all
geographic areas, except North America, and stronger exchange rates. Margin
improvements in North America and Europe offset declines in the other areas.
Operating income in North America advanced 4.4%, Europe 18%, Latin America 28%,
and Asia 1%. Baking business
<PAGE> 13
CPC INTERNATIONAL INC. 15
results, excluding its share of the special items, increased more than 70% due
to the fourth-quarter acquisition and improvement in margins. Corn refining
operating income, excluding its share of the special items, was 3.3% higher than
1994. However, 1995 results exclude full year earnings from the ethanol business
sold during the year. Adjusting 1994 for ethanol earnings, corn refining
operating income rose 5.7% with North America and Latin America up 7.2% and
2.1%, respectively.
FINANCING COSTS of $130 million were $33 million higher than 1994 on higher
interest expense resulting from acquisitions and higher exchange losses.
PROVISIONS FOR INCOME TAXES. The effective tax rate in 1995 was 38.5%,
compared with 39.5% in 1994. The lower tax rate in 1995 was attributable to the
effect of declines in worldwide tax rates. This rate was higher than the U.S.
statutory rate of 35% because it includes state income taxes and foreign income
taxed at effective rates higher than the U.S. statutory rate.
NET INCOME AND EARNINGS PER COMMON SHARE of $512 million and $3.43,
respectively, included the special items mentioned above. Excluding these items,
net income and earnings per common share were $548 million and $3.67,
respectively. Results in 1994 also included a restructuring charge which, when
excluded, resulted in net income of $482 million and earnings per common share
of $3.17. Excluding special items, 1995 net income and earnings per common share
increased 14% and 16%, respectively, resulting from higher operating income and
the lower effective tax rate partially offset by higher financing costs. Fewer
shares outstanding also improved earnings per common share.
RESULTS OF OPERATIONS: 1994 COMPARED TO 1993
NET SALES in 1994 advanced 10.2% over the previous year to $7.4 billion, with
consumer foods accounting for 82% of the increase. Of the overall sales gain,
higher volumes, including acquisitions, and better prices accounted for 9.1% and
3.3%, respectively. Weaker currency values partially offset some of the gain.
Acquisitions made in 1994 and 1993 increased 1994 sales by approximately $440
million or 6.5%. Consumer foods sales rose 10.8% in 1994 to $5.8 billion on
solid volume gains. Better prices were largely offset by lower currency values.
Sales in Europe and North America advanced 11.8% and 10.9%, respectively, as
both benefitted from the contributions made by recent acquisitions. Latin
American sales rose 6.2%, restrained by the severe economic conditions in Brazil
that existed for most of the year. Asian sales advanced 15% on solid volume
gains. Sales of the baking business advanced 2% to $421 million. Corn refining
sales increased 10.9% on better prices and higher volumes, despite weaker
currency values. Sales in North America were up 11% compared to a weak prior
year, mostly from corn-cost-driven pricing improvement. Latin American sales
advanced 14% largely on strong volume gains.
COST OF SALES AND OPERATING EXPENSES. Cost of sales as a percentage of net
sales was 60.5% in 1994 resulting in a 39.5% gross profit, slightly lower than
1993. Higher raw material costs more than offset gains achieved from better
pricing and efficiency improvements made in existing businesses. Marketing
expenses as a percentage of net sales increased slightly from last year. The
ratio of selling, general, and administrative expenses to sales was virtually
the same as in 1993.
OPERATING INCOME in 1994 increased 6.3% to $939 million, excluding a special
charge for restructuring of $227 million, as both consumer foods and corn
refining reported gains derived primarily from higher volumes. Consumer foods
operating income, excluding its portion of the restructuring charge, was 5.5%
higher than the prior year on good volume gains in all geographic areas. Weaker
exchange rates and lower margins moderated some of this gain. Operating income
in Europe advanced 13%, North America 2.4%, and Asia 14%. In Latin America,
operating income was down 4.7% for the full year as a result of events in
Brazil, where consumers held back purchasing in response to economic
uncertainties surrounding a new economic plan. Results of the baking business
were below last year largely due to unfavorable volume mix. Corn refining
operating income advanced 14% to $207 million, excluding its portion of the
restructuring charge. The gain was achieved on a combination of higher volumes
and improved margins. In North America, results were 10.8% higher primarily on
margins that recovered from the depressed 1993
<PAGE> 14
16 1995 ANNUAL REPORT
levels caused by flooding in the Midwest and poor corn quality. In Latin
America, earnings rose 40% on strong volume gains.
FINANCING COSTS of $97 million in 1994 were $4 million higher than in 1993,
resulting from higher exchange losses and increased net interest expense.
PROVISION FOR INCOME TAXES. The effective tax rate was 39.5% versus 40% for
the previous year. This was higher than the U.S. statutory rate of 35% because
it includes state income taxes and foreign income generally taxed at rates
higher than the U.S. statutory rate.
NET INCOME AND EARNINGS PER COMMON SHARE of $345 million and $2.25,
respectively, included the after-tax charge for restructuring of $137 million or
$.92 per common share. Excluding this charge, net income was $482 million and
earnings per common share was $3.17. This compares with $454 million and $2.95
per common share in 1993, or an increase of 6.2% and 7.5%, respectively. The
increase resulted from higher operating income. The fewer number of shares
outstanding in 1994 also contributed to the gain in earnings per common share.
KEY BALANCE SHEET ITEMS
At year-end 1995, assets increased $1.8 billion to $7.5 billion from a year
earlier due largely to acquisitions, which added more than $1.4 billion.
Stronger European currency values and capital expenditures also increased total
assets. Total debt increased by nearly $1.2 billion, reflecting mostly the cost
of acquisitions. Total assets in 1994 increased $607 million to $5.7 billion
from year-end 1993. The majority of this increase resulted from acquisitions.
Capital expenditures in 1994 plus stronger European exchange rates at year-end
contributed the balance of the overall increase. At December 31, 1994, total
debt increased $271 million to $1.5 billion, due largely to the financing of
acquisitions and the Company's share repurchase program.
NET CASH FLOWS
Good cash flow continued to finance CPC's working capital and capital
expenditure needs and enabled the Company to continue to increase dividends with
earnings growth. Funds generated in excess were used for acquisitions and share
repurchases. Net cash flows from operations in 1995 of $898 million were 22%
above 1994, which was 4.5% below 1993. The increase in 1995 reflects higher net
income and higher depreciation and amortization, which more than offset an
increase in trade working capital. In 1994 the cash flows from operations were
below 1993, due mostly to an increase in trade working capital. These
internally-generated funds continue to be the Company's primary source of
liquidity. In 1995 borrowings were used to augment internally-generated funds,
principally to finance acquisitions.
Investing activities in 1995 were $1.1 billion higher than in 1994, because
of acquisitions and an increase in capital expenditures. In 1994 investment
activities were higher than 1993 largely due to an increase in the number of
acquisitions. Capital expenditures paid in 1995 of $481 million increased by $80
million. Fifty-four percent of the capital expenditures were for new facilities
and plant upgrades for the consumer foods business. The Company expects to
invest in capital projects at a lower level in 1996 and to continue its share
buyback program, employing internally-generated funds augmented by borrowings as
necessary. The quarterly dividend rate was increased 5.6% in September 1995.
The Company has access to various sources of funds at attractive rates based
on its strong financial condition. CPC's long-term debt rating remained at A+
with Standard & Poor's and Duff & Phelps, and A2 with Moody's.
<PAGE> 15
CPC INTERNATIONAL INC 17
REPORT OF MANAGEMENT
The management of CPC International Inc. is responsible for the financial and
operating information contained in the Annual Report including the financial
statements covered by the independent auditors' report. These statements were
prepared in conformity with United States generally accepted accounting
principles and include, where necessary, informed estimates and judgments.
The Company maintains systems of accounting and internal control designed to
provide reasonable assurance that assets are safeguarded against loss, and that
transactions are executed and recorded properly so as to ensure that the
financial records are reliable for preparing financial statements.
Elements of these control systems are the establishment and communication of
accounting and administrative policies and procedures, the selection and
training of qualified personnel, and continuous programs of internal audits.
The Company's financial statements are reviewed by its Audit Committee, which
is composed entirely of outside Directors. This Committee meets periodically
with the independent auditors, management, and the corporate general auditor to
review the scope and results of the annual audit, interim reviews, internal
controls, internal auditing, and financial reporting matters. The independent
auditors and the corporate general auditor have direct access to the Audit
Committee.
/s/ Konrad Schlatter
KONRAD SCHLATTER
Senior Vice President and Chief Financial Officer
February 5, 1996
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
CPC International Inc.:
We have audited the accompanying consolidated balance sheets of CPC
International Inc. and Subsidiaries as of December 31, 1995 and 1994, 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, 1995. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of CPC
International Inc. and Subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally accepted
accounting principles.
/s/ KMPG Peat Marwick LLP
KPMG PEAT MARWICK LLP
New York, New York
February 5, 1996
<PAGE> 16
1995 ANNUAL REPORT 18
CONSOLIDATED STATEMENTS OF INCOME
CPC International Inc. and Subsidiaries
<TABLE>
<CAPTION>
For the years ended December 31
$ Millions except per share amounts 1995 1994 1993
===============================================================================================
<S> <C> <C> <C>
NET SALES $ 8,432 $ 7,425 $ 6,738
- -----------------------------------------------------------------------------------------------
Cost of sales 5,064 4,496 4,043
- -----------------------------------------------------------------------------------------------
GROSS PROFIT 3,368 2,929 2,695
- -----------------------------------------------------------------------------------------------
Marketing 833 712 643
Selling, general, and administrative expense 1,487 1,289 1,182
Restructuring, integration, and other charges-- net 58 227 --
Income from affiliates and equity in net income
of unconsolidated subsidiaries (17) (11) (13)
- -----------------------------------------------------------------------------------------------
Expenses and other income-- net 2,361 2,217 1,812
- -----------------------------------------------------------------------------------------------
OPERATING INCOME 1,007 712 883
- -----------------------------------------------------------------------------------------------
FINANCING COSTS
Exchange losses 7 5 3
Interest expense-- net 123 92 90
- -----------------------------------------------------------------------------------------------
Total financing costs 130 97 93
- -----------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 877 615 790
Provision for income taxes 338 243 316
Minority stockholders' interest 27 27 20
- -----------------------------------------------------------------------------------------------
NET INCOME $ 512 $ 345 $ 454
- -----------------------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE $ 3.43 $ 2.25 $ 2.95
===============================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 17
19 CPC INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
CPC International Inc. and Subsidiaries
<TABLE>
<CAPTION>
December 31
$ Millions 1995 1994
============================================================================
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 203 $ 125
Accounts receivable-- net 1,293 1,093
Inventories 1,011 888
Prepaid expenses 70 90
- ----------------------------------------------------------------------------
Total current assets 2,577 2,196
- ----------------------------------------------------------------------------
INVESTMENTS IN UNCONSOLIDATED AFFILIATES 93 65
- ----------------------------------------------------------------------------
PLANTS AND PROPERTIES
Land 99 98
Buildings 1,254 844
Machinery and equipment 4,055 3,622
- ----------------------------------------------------------------------------
5,408 4,564
Less accumulated depreciation 2,510 2,264
- ----------------------------------------------------------------------------
Total plants and properties 2,898 2,300
- ----------------------------------------------------------------------------
INTANGIBLES
Excess cost over net assets of businesses acquired 1,506 755
Other intangibles 488 371
- ----------------------------------------------------------------------------
1,994 1,126
Less accumulated amortization 214 172
- ----------------------------------------------------------------------------
Total intangibles 1,780 954
- ----------------------------------------------------------------------------
DEFERRED TAXES ON INCOME -- 15
- ----------------------------------------------------------------------------
OTHER ASSETS 154 138
- ----------------------------------------------------------------------------
TOTAL ASSETS $7,502 $5,668
============================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 18
1995 ANNUAL REPORT 20
<TABLE>
<CAPTION>
$ Millions 1995 1994
===========================================================================
<S> <C> <C>
LIABILITIES
CURRENT LIABILITIES
Notes payable $ 1,290 $ 598
Current portion of long-term debt 109 66
Accounts payable 747 573
Accrued liabilities 915 717
Income taxes payable 5 134
- ---------------------------------------------------------------------------
Total current liabilities 3,066 2,088
- ---------------------------------------------------------------------------
NONCURRENT LIABILITIES 907 810
- ---------------------------------------------------------------------------
LONG-TERM DEBT 1,333 879
- ---------------------------------------------------------------------------
DEFERRED TAXES ON INCOME 45 --
- ---------------------------------------------------------------------------
MINORITY STOCKHOLDERS' INTEREST 164 142
- ---------------------------------------------------------------------------
EQUITY
STOCKHOLDERS' EQUITY
Preferred stock - authorized 25,000,000 shares
$1 par value -- --
Designations
Series A ESOP Convertible
3,000,000 shares designated 190 194
Series A Junior Participating
600,000 shares designated -- --
Common stock - authorized 900,000,000 shares
$.25 par value - issued 195,271,444 shares 49 49
Capital in excess of par value stock 167 155
Unearned ESOP compensation (128) (141)
Cumulative translation adjustment (163) (181)
Treasury stock, at cost (1,317) (1,231)
Retained earnings 3,189 2,904
- ---------------------------------------------------------------------------
Total stockholders' equity 1,987 1,749
- ---------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,502 $ 5,668
===========================================================================
</TABLE>
<PAGE> 19
21 CPC INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
CPC International Inc. and Subsidiaries
<TABLE>
<CAPTION>
For the years ended December 31
$ Millions 1995 1994 1993
==================================================================================================
<S> <C> <C> <C>
CASH FLOWS FROM (USED FOR) OPERATING ACTIVITIES
Net income $ 512 $ 345 $ 454
Non-cash charges (credits) to net income
Depreciation and amortization 322 288 266
Restructuring, integration, and other charges-- net 58 227 --
Deferred taxes 60 (54) (23)
Translation losses -- 3 7
Other-- net 10 25 32
Changes in trade working capital
Accounts receivable (109) (117) (24)
Inventories (65) (18) (26)
Accounts payable and accrued liabilities 110 37 85
- --------------------------------------------------------------------------------------------------
Net cash flows from operating activities 898 736 771
- --------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED FOR) INVESTING ACTIVITIES
Capital expenditures paid (481) (401) (363)
Proceeds from disposal of plants and properties 3 9 23
Proceeds from businesses sold 76 -- --
Purchase of minority interests in affiliates -- -- (16)
Investment in joint venture (13) -- --
Businesses acquired (1,222) (185) (73)
- --------------------------------------------------------------------------------------------------
Net cash flows used for investing activities (1,637) (577) (429)
- --------------------------------------------------------------------------------------------------
Net cash flows after investments (739) 159 342
- --------------------------------------------------------------------------------------------------
CASH FLOWS FROM (USED FOR) FINANCING ACTIVITIES
Purchase of treasury stock (99) (165) (48)
New long-term debt 117 82 178
Repayment of long-term debt (32) (89) (262)
Net change in short-term debt 1,045 182 (9)
Dividends paid on common stock (213) (199) (190)
Dividends paid on preferred stock (15) (16) (16)
Common stock issued 13 7 5
Other liabilities (deposits) 1 (4) 13
- --------------------------------------------------------------------------------------------------
Net cash flows from (used for) financing activities 817 (202) (329)
- --------------------------------------------------------------------------------------------------
Effects of exchange rate changes on cash -- 2 (5)
- --------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 78 (41) 8
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 125 166 158
- --------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 203 $ 125 $ 166
==================================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 20
1995 ANNUAL REPORT 22
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
CPC International Inc. and Subsidiaries
<TABLE>
<CAPTION>
==========================================================================================================================
Capital in Unearned Cumulative Treasury
Preferred Common excess of ESOP translation common Retained
$ Millions stock stock par value compensation adjustment stock earnings
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1992 $198 $49 $147 $(168) $(56) $(1,030) $2,523
- --------------------------------------------------------------------------------------------------------------------------
Net income 454
Cash dividends declared
($1.28 per share) (192)
Stock issued in connection with:
Deferred compensation 4 5
Translation adjustment including the
effects of hedging, net of taxes (117)
Series A ESOP preferred stock
dividend, net of taxes (11)
ESOP compensation earned 13
ESOP shares redeemed (2)
Treasury stock acquired (48)
- --------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1993 196 49 151 (155) (173) (1,073) 2,774
- --------------------------------------------------------------------------------------------------------------------------
Net income 345
Cash dividends declared
($1.38 per share) (204)
Stock issued in connection with:
Stock options 2
Deferred compensation 4 5
Translation adjustment including the
effects of hedging, net of taxes (8)
Series A ESOP preferred stock
dividend, net of taxes (11)
ESOP compensation earned 14
ESOP shares redeemed (2)
Treasury stock acquired (165)
- --------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1994 194 49 155 (141) (181) (1,231) 2,904
- --------------------------------------------------------------------------------------------------------------------------
Net income 512
Cash dividends declared
($1.48 per share) (216)
Stock issued in connection with:
Stock options 3 6
Deferred compensation 9 7
Translation adjustment including the
effects of hedging, net of taxes 18
Series A ESOP preferred stock
dividend, net of taxes (11)
ESOP compensation earned 13
ESOP shares redeemed (4)
Treasury stock acquired (99)
- --------------------------------------------------------------------------------------------------------------------------
Balance, December 31, 1995 $190 $49 $167 $(128) $(163) $(1,317) $3,189
==========================================================================================================================
</TABLE>
See notes to consolidated financial statements.
<PAGE> 21
23 CPC INTERNATIONAL INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CPC International Inc. and Subsidiaries
================================================================================
SUMMARY OF ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - Consolidated financial statements include the
accounts of the Company and its subsidiaries. The accounts of subsidiaries
outside of the U.S., except for those in Canada, are based on fiscal years
ending September 30.
FOREIGN CURRENCY TRANSLATION - Assets and liabilities of foreign subsidiaries
other than those in highly inflationary economies are translated at current
exchange rates with the related translation adjustments reported as a separate
component of stockholders' equity. Income statement accounts are translated at
the average exchange rate during the period. In highly inflationary economies
where the U.S. dollar is considered the functional currency, monetary assets and
liabilities are translated at current exchange rates with the related adjustment
included in net income. Non-monetary assets and liabilities are translated at
historical exchange rates.
CASH AND CASH EQUIVALENTS - Cash equivalents consist of all investments
purchased with an original maturity of three months or less, and which have
virtually no risk of loss in value. At December 31, 1995, and 1994, the Company
had cash equivalents of $43 million and $9 million, respectively.
INVENTORIES are stated at the lower of cost or market. In the U.S., vegetable
oils and corn are valued at cost on the last-in, first-out method. Other U.S.
inventories are valued at cost on the first-in, first-out method. Had the
first-in, first-out method been used for all U.S. inventories, the carrying
value of these inventories would have increased by $21 million and $18 million
in 1995 and 1994, respectively. Outside the U.S., inventories generally are
valued at average cost.
INVESTMENTS IN UNCONSOLIDATED AFFILIATES are carried at cost or less, adjusted
to reflect the Company's proportionate share of income or loss less dividends
received. Consolidated retained earnings at December 31, 1995, included $16
million of undistributed earnings of unconsolidated affiliates, primarily
representing companies of which the Company owns 50% or less.
PLANTS AND PROPERTIES are stated at cost. Depreciation is generally computed on
the straight-line method over the estimated useful lives of depreciable assets
at rates ranging from 2% to 10% for buildings and 5% to 20% for all other
assets. Where permitted by law, accelerated depreciation methods are used for
tax purposes.
INTANGIBLES - The Company amortizes, on a straight-line basis, the excess cost
of net assets acquired after October 31, 1970, over periods not exceeding 40
years. Other intangible assets, including trademarks, licenses, and patents, are
amortized over their economic lives. The recoverability of the carrying values
of intangibles is evaluated regularly using current and forecasted profitability
of the related acquired business after amortization.
FINANCING COSTS - In line with the functional currency concept under which the
Company uses the U.S. dollar for highly inflationary economies, the
principal-preservation element inherent in local interest charges has been
recorded in cost of sales, rather than under financing costs, consistent with
the classification of translation gains resulting from holding local currency
debt. In 1995, 1994, and 1993, $6 million, $21 mil-lion, and $7 million,
respectively, were included in cost of sales.
INCOME TAXES - Deferred income taxes reflect the differences between the assets
and liabilities recognized for financial reporting purposes and amounts
recognized for tax purposes. Deferred taxes are based on tax laws as currently
enacted. The Company makes provisions for estimated U.S. and foreign income
taxes, less available tax credits and deductions, that may be incurred on the
remittance by the Company's subsidiaries of undistributed earnings, except those
deemed to be indefinitely reinvested.
EARNINGS PER COMMON SHARE has been computed by dividing net income, less
preferred stock dividends net of taxes of $11 mil-lion in 1995, 1994, and 1993,
by the weighted average number of common shares outstanding of 146 million in
1995, 148 million in 1994, and 150 million in 1993.
STOCK COMPENSATION - The Company follows APB Opinion 25, "Accounting for Stock
Issued to Employees," for recognizing stock-based expense in the financial
statements. Long-lived assets - Adoption in 1996 of FAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," is
not expected to have a material impact on the Company's financial position and
results.
LONG-LIVED ASSETS - Adoption in 1996 of FAS 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of," is not
expected to have a material impact on the Company's financial position and
results.
ENVIRONMENTAL CONTINGENCIES - The Company accounts for environmental
contingencies in accordance with FAS 5, "Accounting for Contingencies," which
requires expense recognition when it is both "probable" that an obligation
exists and that the obligation can be "reasonably estimated." In
<PAGE> 22
1995 ANNUAL REPORT 24
assessing probability, as well as in estimating costs, the Company uses the
coordinated efforts of environmental professionals and consultants as well as
in-house and outside counsel and accountants, taking into account possible
methods of remediation acceptable to all parties. The Company believes it can
recover, fully or partially, such liabilities from other potential responsible
parties or from its insurers. Wherever this is the case such recovery is
aggressively pursued. Nevertheless, until final agreement has been reached for
such claims from these parties, in accordance with FAS 5, such expected
recoveries are not considered in establishing estimated costs. In addition,
estimated costs are based on expected future costs which have not been
discounted.
RISKS AND UNCERTAINTIES - The Company operates in three business segments and in
more than 60 countries, and in each country, the business is subject to varying
degrees of risk and uncertainty. It insures its business and assets in each
country against insurable risks in a manner that it deems appropriate. Because
of its diversity the Company believes that the risk of loss from non-insurable
events in any one business or country would not have material adverse affect on
the Company's operations as a whole. Additionally, the Company believes there is
no concentration of risk with any single customer or supplier, or small group of
customers or suppliers, whose failure or non-performance would materially affect
the Company's results.
RECLASSIFICATIONS - Certain 1994 and 1993 amounts have been reclassified to
conform to the 1995 consolidated financial statement presentation.
================================================================================
ACQUISITIONS AND JOINT VENTURES
In the first quarter of 1995, the Company's Mexican corn refining business
entered into a joint venture with Arancia, S.A. de C.V., a corn refining
business located in Mexico. This venture has annual sales of approximately $250
million and will be accounted for on the equity method. During 1995, the Company
acquired the Lesieur mayonnaise and salad dressings business in France and the
Golden Wonder Pot Noodle instant hot snacks business in the United Kingdom for a
total of approximately $330 million. The businesses have combined sales of
approximately $200 million. These acquisitions were accounted for under the
purchase method.
On October 2, 1995, the Company acquired a nationwide baking business from
Kraft Foods, Inc. (the acquired baking business), for approximately $865
million. This business, which has annual sales of $1.2 billion, includes four
major market-leading brands: Entenmann's sweet baked products, Freihofer's and
Oroweat breads, and Boboli Italian bread shells. This acquisition has been
accounted for under the purchase method and the results of the operations of the
acquired baking business have been included in the consolidated financial
statements since the date of acquisition. The purchase price was allocated based
on estimated fair values at the date of acquisition. This resulted in an excess
of purchase price over assets acquired of $471 million, which is being amortized
on a straight-line basis over 40 years.
The following unaudited pro forma information presents a summary of
consolidated results of operations of the Company and the acquired baking
business as if the acquisition had occurred January 1, 1994.
<TABLE>
<CAPTION>
$ Millions except per share amounts 1995 1994
- --------------------------------------------------------------------------------
<S> <C> <C>
Net sales $9,336 $8,569
Net income $ 514 $ 362
Earnings per common share $ 3.44 $ 2.36
- --------------------------------------------------------------------------------
</TABLE>
These unaudited pro forma results have been prepared for comparative purposes
only and include certain adjustments, such as additional depreciation expense as
a result of a step-up in the basis of fixed assets, additional amortization
expense as a result of goodwill and other intangible assets, and an increased
interest expense on acquisition debt. They do not purport to be indicative of
the results of operations which actually would have resulted had the combination
been in effect on January 1, 1994, or of future results of operations of the
consolidated entities.
In conjunction with this acquisition, the Company recorded a fourth-quarter
integration charge of $55 million, $34 million after taxes or $.23 per common
share, to cover the anticipated costs of combining its existing baking business
with the acquired baking business. The charge relates to the closure of
duplicate administrative, warehouse, and plant facilities belonging to CPC's
existing baking business, the consolidation of redundant business systems, and
the reduction of some CPC baking personnel performing duplicate tasks. The
composition of this charge was as follows: $16 million for plant and
<PAGE> 23
25 CPC INTERNATIONAL INC.
properties, $12 million for severance, and $27 million for relocation,
consolidation, and related expenses. The latter two items were unused at
December 31, 1995.
APPROXIMATELY 200 EMPLOYEES WILL BE AFFECTED BY THIS PROGRAM.
During 1994, the Company acquired an 85% interest in a European producer and
marketer of Pfanni potato products. In addition, the Company acquired the jams,
juices, and related food products business of a company in Sri Lanka. The total
costs of these investments amounted to $196 million including assumed debt. The
Company also purchased the majority interest of a newly formed company, which
manufactures and markets selected CPC food brands in South Africa and exports
CPC products to other countries of sub-Saharan Africa. This investment cost
about $20 million. Additionally, the Company acquired three consumer foods
businesses located in the United States, for a total cost of approximately $67
million. These businesses are Western salad dressings and specialty sauces;
Iberia Foods, a marketer of Hispanic products; and a smaller business which
produces snacks.
================================================================================
RESTRUCTURING, INTEGRATION, AND OTHER CHARGES -- NET
The Company recorded a charge in the third quarter of 1995 of $75 million for
the closing of a consumer foods plant in Santa Fe Springs, California, and the
realignment of several production facilities as well as sales force
reorganization for both the consumer foods and corn refining operations around
the world. This charge adds to the restructuring activities that were announced
in June 1994. The restructuring charges and their utilization are summarized
below:
<TABLE>
<CAPTION>
To be
1994 Utilized 1995 Utilized utilized in
$ Millions Charge in 1994 Charge in 1995 the future
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Employee severance $ 102 $ (12) $ 27 $ (40) $ 77
Plant and support facilities 114 (114) 48 (48) --
Other 11 -- -- (11) --
- -------------------------------------------------------------------------------------------
Total $ 227 $(126) $ 75 $ (99) $ 77
- -------------------------------------------------------------------------------------------
</TABLE>
The 1994 and 1995 charges were designed to cover the cost of a phased
reduction of about 3,400 employees worldwide and the cost of realignment of
manufacturing capacity. At December 31, 1995, approximately $50 million of the
1994 charge remained unused. At December 31, 1995, $64 million was in current
liabilities and $13 million was in noncurrent liabilities.
In 1995, the Company recorded a gain of $72 million from the sale of its 50%
share of Pekin Energy Company, an ethanol business; and the sale of a small
insecticide business in Brazil. This gain combined with the third-quarter charge
mentioned above resulted in a total net charge of $3 million, $2 million after
taxes or $.01 per common share.
In the fourth quarter of 1995, the Company recorded an integration charge
related to the baking acquisition (see Acquisitions and joint ventures note for
details).
================================================================================
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplementary information for the consolidated statements of cash flows is set
forth below:
<TABLE>
<CAPTION>
$ Millions 1995 1994 1993
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash paid during the year for:
Interest $ 123 $ 102 $ 94
Income taxes 340 283 298
- --------------------------------------------------------------------------------------
Details of businesses acquired were as follows:
Fair value of assets acquired $1,420 $ 452 $ 84
Liabilities assumed 198 267 11
- --------------------------------------------------------------------------------------
Cash paid for acquisitions $1,222 $ 185 $ 73
- --------------------------------------------------------------------------------------
</TABLE>
================================================================================
FINANCING ARRANGEMENTS-SHORT-TERM
The Company uses the commercial paper market in the U.S. to supplement long-term
borrowings. Average quarterly commercial paper borrowings in 1995 and 1994 were
$594 million and $372 million, respectively, with maximum borrowings in 1995 and
1994 of $1.3 billion and $515 million, respectively, and a weighted average
interest rate in 1995 and 1994 of 6% and 4.5%, respectively.
For the international operations, the maximum month-end balance of bank
borrowings during 1995 and 1994 was $574 million and $409 million, respectively.
Average quarterly bank borrowings were $383 million for 1995 and $343 million
for 1994. The weighted average interest rate for bank borrowings in 1995 and
1994 was 12% and 10.9%, respectively.
The Company had unused lines of credit totaling $2.3 billion and $1.2 bil-
<PAGE> 24
1995 ANNUAL REPORT 26
lion at December 31, 1995, and 1994, respectively.
LONG-TERM
A summary of long-term debt is as follows:
<TABLE>
<CAPTION>
$ Millions 1995 1994
- ---------------------------------------------------------------------
<S> <C> <C>
PAYABLE IN U.S. DOLLARS
7.71% ESOP guaranteed notes due
December 2004 $ 161 $ 173
Medium-term notes due 1996-2005
at various rates 150 50
8.5% sinking fund debentures due April 2016 100 100
5.625%-6.75% pollution control revenue
bonds due 2007-2016 15 15
Commercial paper supported by revolving
credit agreements at a weighted interest
rate of 6% in 1995 and 4.5% in 1994 500 100
Other notes and loans at various rates
and due dates 50 37
- ---------------------------------------------------------------------
Total 976 475
- ---------------------------------------------------------------------
PAYABLE IN OTHER CURRENCIES
5% Swiss franc debentures, due March 2045,
10-year variable interest rates 174 155
6.75% German mark bearer bonds due
January 2001 141 129
Bank and other loans at prevailing interest
rates with various due dates:
- Secured 25 25
- Unsecured 126 161
- ---------------------------------------------------------------------
Total 466 470
- ---------------------------------------------------------------------
1,442 945
Less current maturities 109 66
Total $1,333 $ 879
- ---------------------------------------------------------------------
</TABLE>
The Company is required to apply toward retirement of the principal of the
indebtedness not less than the following amounts in the period 1996 through
2000: 1996 (included in current liabilities), $109 million; 1997, $52 million;
1998, $70 million; 1999, $62 million; and 2000, $64 million. At December 31,
1995, buildings, equipment, and certain other assets located outside the U.S.
totaling approximately $97 million, have been pledged as collateral for the
secured loans.
During 1995 the Company entered into new revolving credit agreements with a
group of U.S. and international banks. These agreements permit the Company to
borrow up to $1.6 billion on an unsecured basis at variable interest rates.
These agreements mature in the period from 1996 through 2000. Covenants in these
agreements require the Company to maintain total debt at no more than 65% of
total capitalization. At December 31, 1995, the debt to capitalization ratio was
55%. There were no borrowings outstanding under these facilities. For 1994 the
Company had revolving credit agreements, which permitted it to borrow up to $500
million on an unsecured basis.
During 1995 the Company issued $100 million of medium-term notes with
maturities of three to seven years under a shelf registration filed with the
Securities and Exchange Commis-sion in February 1994. In December 1995, the
Company filed a shelf registration for borrowings of up to $700 million. Under
this filing, the Company in January 1996 issued $300 million of 6.15% notes
maturing in 2006. In January 1996, the Company also established a $200 million
medium-term note program under the December 1995 shelf registration. As of
January 31, 1996, the Company has not issued any notes under this program.
The Company is the guarantor of the ESOP notes (see Stockholders' equity
note), which were issued in 1989 in the initial amount of $200 million.
================================================================================
FINANCIAL INSTRUMENTS
FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying values of cash equivalents,
accounts receivable, accounts payable, and short-term debt approximate fair
values. The fair value of long-term debt at December 31, 1995, and 1994, was
$1.4 billion and $870 million, respectively. The fair value of long-term debt
was based on quotes obtained from brokers.
FOREIGN EXCHANGE CONTRACTS - The Company's policy is to hedge its exposure in
foreign currency cash flows resulting from planned dividends, fees and
royalties, intercompany loans, and other similar transactions. The Company also
hedges certain net investments in foreign operations with foreign exchange
contracts or with borrowings denominated in the particular foreign currency. As
a matter of policy, the Company does not speculate on foreign currencies. Gains
and losses,
<PAGE> 25
27 CPC INTERNATIONAL INC.
both realized and unrealized, on financial instruments that hedge operating
activities and related cashflows, flow through income in the same period as the
items being hedged. Gains and losses, both realized and unrealized, on financial
instruments that hedge the Company's investments in foreign operations are
recognized as part of the cumulative translation adjustment in stockholders'
equity.
At December 31, 1995, the Company had forward exchange contracts to deliver
$391 million of foreign currencies comprising $93 million in British pounds, $70
million in Italian lira, $55 million in Dutch guilders, $130 million in French
francs, and $43 million in various other currencies. The Company also had
contracts to purchase $32 million in various currencies.
At December 31, 1994, the Company had forward exchange contracts to deliver
$414 million of foreign currencies comprising $137 million in German marks, $87
million in British pounds, $14 million in Swiss francs, $71 million in Italian
lira, $26 million in Dutch guilders, $52 million in French francs, and $27
million in various other currencies. The Company also had, at December 31, 1994,
contracts to purchase $56 million worth of foreign currencies consisting of $15
million in Italian lira, $13 million in Austrian schillings, and $28 million in
other currencies. Most of the forward currency contracts outstanding mature
within 90 days of the respective balance sheet dates.
INTEREST RATE SWAPS - The Company utilizes interest rate swap agreements to
minimize its financing costs and to balance its current and non-current asset
levels with floating and fixed-rate debt positions. The Company's risk related
to swap agreements is limited to the cost of replacing such agreements at
current market rates. The Company continually monitors its positions and credit
ratings of its counterparties, and limits the number of agreements it enters
into with any one party. Management believes the risk of incurring a material
loss is remote. Any interest rate differential on interest rate swaps is
recognized as an adjustment to interest expense over the term of the agreement.
At December 31, 1995, the Company had $50 million notional amount of interest
rate swap agreements outstanding. A portion of the Company's variable interest
rate debt position was hedged with these agreements with a weighted-average
receive rate of 5.35% and a weighted-average pay rate of 5.98%. In conjunction
with the purchase of the acquired baking business, the Company entered into
interest rate futures contracts maturing on January 16, 1996, which locked in a
fixed interest rate on 10-year U.S. Treasury bonds of 6.27% on a notional amount
of $300 million. The market rate for these instruments at December 31, 1995, was
5.57%.
At December 31, 1994, the Company had $280 million notional amount of
interest rate swap agreements outstanding. A portion of the Company's variable
interest rate debt position was hedged with $100 million notional amount of swap
agreements with a weighted-average receive rate of 6.50% and a weighted-average
pay rate of 5.09%. The remaining agreements with maturity dates through 2000
also effectively convert fixed interest rate debt into variable interest rate
debt with a weighted-average receive rate of 5.89% and a weighted-average pay
rate of 6.50%. Net unrealized gains and losses at December 31, 1995, and 1994,
were not significant.
COMMODITIES - The Company's products are manufactured from a number of raw
materials, including soybean and other edible oils, peanuts, corn, and wheat,
all of which are, and are expected to continue to be, in adequate supply. The
Company follows a policy of hedging its exposure to commodities fluctuations
with commodities futures contracts for certain of its key North American raw
material purchases. Such raw materials may or may not be hedged at any given
time based on management's decisions as to the need to fix the cost of such raw
materials. In addition, commodity futures contracts are employed to fix the raw
material cost of certain fixed-price sales contracts of the corn refining
business. Gains and losses arising from such hedging transactions are included
with the cost of raw material purchases.
At December 31, 1995, and 1994, the Company had commodity futures contracts to
purchase primarily corn, total-ing $161 million and $138 million, respectively.
Contracts for delivery beyond March 31, 1996, amount to about $99 million, of
which $53 million is due in May and $46 million in July. At December 31, 1995,
the Company had unrealized gains of $20 million on these contracts.
<PAGE> 26
1995 ANNUAL REPORT 28
================================================================================
PENSION PLANS
The Company and its subsidiaries have a number of defined benefit pension plans
covering substantially all U.S. employees and certain groups of employees in
foreign countries. Plans covering salaried employees generally provide benefits
based on the employee's final salary level or on the average salary level for a
specified period. Plans covering hourly employees generally provide benefits of
stated amounts for each year of service. The Company's general funding policy is
to contribute annually the maximum amount that can be deducted for income tax
purposes. However, certain foreign countries allow income tax deductions without
regard to contribution levels, and the Company's policy in those countries is to
make the contribution required by the terms of the plan. Domestic plan assets
consist primarily of common stock, real estate, corporate debt securities, and
short-term investment funds. Approximately $64 million (10%) of the domestic
qualified plan assets are in the Company's common stock.
The components of net periodic pensions cost are as follows:
<TABLE>
<CAPTION>
U.S. PLANS
- --------------------------------------------------------------------------------
$ Millions 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost (benefits earned during
the period) $ 17 $ 17 $ 13
Interest cost on projected
benefit obligation 43 39 38
Actual return on plan assets (123) (38) (41)
Net amortization and deferral 78 (10) (8)
- -------------------------------------------------------------------------------
Net periodic pension cost $ 15 $ 8 $ 2
- -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL PLANS
- --------------------------------------------------------------------------------
$ Millions 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost (benefits earned during
the period) $ 17 $ 16 $ 16
Interest cost on projected
benefit obligation 43 38 35
Actual return on plan assets (30) (19) (26)
Net amortization and deferral 9 (2) 8
- -------------------------------------------------------------------------------
Net periodic pension cost $ 39 $ 33 $ 33
- -------------------------------------------------------------------------------
</TABLE>
The funded status for the Company's major pension plans based on valuations
as of September 30, is as follows:
<TABLE>
<CAPTION>
U.S. PLANS
- ---------------------------------------------------------------------------------------------------
Assets exceed Accumulated benefits
accumulated benefits exceed assets
$ Millions 1995 1994 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligation:
Vested $(524) $(450) $ (30) $ (17)
Nonvested (17) (17) (1) (1)
- ---------------------------------------------------------------------------------------------------
Accumulated benefit obligation (541) (467) (31) (18)
Effect of projected future
compensation levels (81) (77) (13) (19)
- ---------------------------------------------------------------------------------------------------
Projected benefit obligation (622) (544) (44) (37)
Plan assets at fair value 657 576 18 8
- ---------------------------------------------------------------------------------------------------
Plan assets in excess of (less than)
projected benefit obligation 35 32 (26) (29)
Unrecognized net loss (gain) 19 29 (1) 7
Unrecognized prior service cost 13 12 15 14
Unrecognized net transition obligation 11 12 -- --
Post September 30 contributions 1 -- -- --
Additional minimum liability -- -- (4) (2)
- ---------------------------------------------------------------------------------------------------
(Accrued) prepaid pension cost
at December 31 $ 79 $ 85 $ (16) $ (10)
- ---------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 27
29 CPC INTERNATIONAL INC.
<TABLE>
<CAPTION>
INTERNATIONAL PLANS
- ---------------------------------------------------------------------------------------------------
Assets exceed Accumulated benefits
accumulated benefits exceed assets
$ Millions 1995 1994 1995 1994
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actuarial present value of benefit obligation:
Vested $(186) $(165) $(371) $(321)
Nonvested (11) (9) (15) (16)
- ---------------------------------------------------------------------------------------------------
Accumulated benefit obligation (197) (174) (386) (337)
Effect of projected future
compensation levels (23) (35) (39) (38)
- ---------------------------------------------------------------------------------------------------
Projected benefit obligation (220) (209) (425) (375)
Plan assets at fair value 264 252 126 107
- ---------------------------------------------------------------------------------------------------
Plan assets in excess of (less than)
projected benefit obligation 44 43 (299) (268)
Unrecognized net loss (gain) (37) (43) 55 50
Unrecognized prior service cost 10 9 8 4
Unrecognized net transition obligation (7) 1 15 17
Additional minimum liability -- -- (42) (40)
- ---------------------------------------------------------------------------------------------------
(Accrued) prepaid pension cost
at December 31 $ 10 $ 10 $(263) $(237)
- ---------------------------------------------------------------------------------------------------
</TABLE>
Assumptions (reflecting averages across all plans):
<TABLE>
<CAPTION>
U.S. PLANS
- ----------------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average discount rates 6.6% 7.7% 6.5%
Rate of increase in compensation levels 5.3% 6.3% 5.0%
Long-term rate of return on plan assets 9.7% 8.6% 9.5%
- ----------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL PLANS
- ----------------------------------------------------------------------------------
1995 1994 1993
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average discount rates 7.4% 7.5% 7.5%
Rate of increase in compensation levels 4.8% 4.9% 5.1%
Long-term rate of return on plan assets 7.9% 8.0% 7.9%
- ----------------------------------------------------------------------------------
</TABLE>
In addition, the Company sponsors defined contribution pension plans covering
certain domestic and foreign employees. Contributions are determined by matching
a percentage of employee contributions. Expense recognized in 1995, 1994, and
1993 was $23 million, $19 million, and $17 million, respectively.
The Company also contributes to union-sponsored, defined benefit,
multi-employer pension plans. Expense recognized in 1995, 1994, and 1993 was $10
million, $4 million, and $3 million, respectively.
================================================================================
OTHER POSTRETIREMENT AND POSTEMPLOYMENT BENEFITS
In addition to pension benefits, the Company provides certain health care and
life insurance benefits for its domestic and certain foreign retired employees.
Substantially all of the Company's domestic employees become eligible for these
benefits when they meet minimum age and service requirements. The Company has
the right to modify or terminate these benefits.
The following is a summary of the status of the Company's major
postretirement benefit plans based on valuations as of September 30, 1995, and
1994:
<TABLE>
<CAPTION>
$ Millions 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 194 $ 192
Fully eligible active plan participants 38 42
Other active plan participants 60 44
- -------------------------------------------------------------------------------
Total 292 278
- -------------------------------------------------------------------------------
Unrecognized prior service cost 9 7
Unrecognized net gain 36 27
Post September 30 claims (4) (4)
- -------------------------------------------------------------------------------
Accrued postretirement benefit cost at
December 31 $ 333 $ 308
- -------------------------------------------------------------------------------
</TABLE>
Net periodic postretirement benefit cost included the following components:
<TABLE>
<CAPTION>
$ Millions 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost (benefits earned during
the year) $ 5 $ 4 $ 4
Interest cost on the accumulated
postretirement benefit obligation 21 18 21
Net amortization and deferral (1) (1) --
- --------------------------------------------------------------------------------
Net periodic postretirement benefit $ 25 $ 21 $ 25
- --------------------------------------------------------------------------------
</TABLE>
Annual increases in per capita cost of health care benefits of 10% pre-age-65
and 8% post-age-65 were assumed for 1996 to 1997. Rates were assumed to decrease
by 1% thereafter until reaching 4.5%. Increasing the assumed health care cost
trend rate by 1% increases the APBO by $23 million, with a corresponding effect
on the service and interest cost components of the net periodic postretirement
benefit cost of $4 million. The discount rate used to determine the APBO for
1995 and 1994 is 6.5% and 7.75%, respectively.
<PAGE> 28
1995 ANNUAL REPORT 30
================================================================================
STOCKHOLDERS' EQUITY -
PREFERRED STOCK
The Company has authorized 25,000,000 shares of $1 par value preferred stock of
which 3,000,000 shares were designated for the Company's ESOP and 600,000 shares
of Series A Junior Participating shares were designated for the shareholder
rights plan. At December 31, 1995, 1994, and 1993, there were 2,133,741,
2,170,854, and 2,192,237 Series A ESOP shares outstanding, respectively. No
Series A Junior Participating shares were issued.
EMPLOYEE STOCK OWNERSHIP PLAN (ESOP) - The Company has an Employee Stock
Ownership Plan (ESOP) as part of its Savings/Retirement Plan covering
substantially all U.S. salaried employees. The ESOP is designed to provide
employees with increased ownership in the Company's stock. To accomplish this,
the ESOP borrowed $200 million in a public offering (ESOP Notes) and used the
proceeds to buy a like amount of the Company's Series A ESOP convertible
preferred stock. The preferred stock is convertible into approximately 4.4
million shares of the Company's common stock. The preferred stock pays an annual
dividend of $7.14 per share, and will be used by the ESOP, together with the
Company's contributions, to repay the ESOP notes. The ESOP is intended to
satisfy the Company's obligation to match employees' contributions to the
Savings/Retirement Plan on a $1-for-$1 basis. Since the ESOP notes are
guaranteed by the Company, they are reflected in the consolidated balance sheet
as short-term and long-term debt, with a corresponding amount shown in the
stockholders' equity section as unearned ESOP compensation.
In 1995 and 1994, 163,038 shares and 158,297 shares, respectively, of
preferred stock valued at $14.5 million and $14.1 million, were allocated to
Plan participants based on the semi-annual payments of both principal and
interest due on the ESOP notes. The notes have a 15-year maturity and an
original fixed-interest rate of 7.78%, which was subsequently adjusted to 7.71%
based on the terms of the instrument. A portion of the notes was refinanced,
resulting in an overall effective rate of 7.41%. In 1995 and 1994, $12 million
and $11 million of principal, respectively, was paid on the ESOP notes.
SHAREHOLDER RIGHTS PLAN - Under the Company's shareholder rights plan, each
share of the Company's common stock carries with it one-half of a preferred
stock purchase right. The rights will at no time have voting power or pay
dividends. The rights will become exercisable if a person or group acquires 15%
or more of the Company's common stock, or announces a tender or exchange offer
that could result in the acquisition of 15% or more thereof. When exercisable,
each full right entitles a holder to buy one two-hundredths of a share of Series
A Junior Participating Preferred Stock at a price of $325. If the Company is
involved in a merger or other business combination with a 15% or more
stockholder, each full right will entitle a holder to buy a number of the
acquiring company's shares having a value of twice the exercise price of the
right. Alternatively, if a 15% stockholder engages in certain self-dealing
transactions or acquires the Company in such a manner that the Company and its
common stock survive, or if any person acquires 15% or more of the common stock,
except pursuant to an offer for all shares at a fair price, each full right not
owned by a 15% or more stockholder may be exercised for common stock of the
Company (or, in certain circumstances, other consideration) having a market
value of twice the exercise price of the right. The Company may redeem the
rights for one cent each at any time before an acquisition of 15% or more of its
voting securities and for at least 10 business days thereafter. Unless redeemed
earlier, the rights will expire on March 19, 2001.
TREASURY STOCK
The Company had common stock in treasury at the end of 1995, 1994, and 1993
totaling 49,665,627, 48,510,458, and 45,454,592 shares, respectively.
In October 1993, the Board of Directors approved a 4 million share buyback
program, which commenced in January 1994 and was completed during the first half
of 1995. On January 17, 1995, the Board of Directors approved a 5 million share
buyback program, which began upon completion of the previous program.
<PAGE> 29
31 CPC INTERNATIONAL INC.
================================================================================
STOCK AND PERFORMANCE PLAN
The Company has a stock and performance plan (the 1993 Plan) which provides for
grants of stock options, restricted stock awards, and performance units. A
Committee of non-employee members of the Board of Directors administers the
Plan. Seven and a half million shares of common stock were reserved for issuance
under the 1993 Plan, including those shares remaining under the prior plans.
Under the 1993 Plan, stock options are granted at 100% of market value at date
of grant and expire not more than 10 years from date of grant. The following
table summarizes transactions during 1995, 1994, and 1993, including balances
from previous plans:
<TABLE>
<CAPTION>
1995 1994 1993
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
NUMBER OF SHARES
Balance beginning of year 2,424,011 2,006,848 1,613,724
Granted 800,609 749,950 647,050
Exercised (231,599) (82,843) (26,680)
Canceled (310,569) (249,944) (227,246)
- ---------------------------------------------------------------------------------
Balance end of year 2,682,452 2,424,011 2,006,848
- ---------------------------------------------------------------------------------
Exercisable at year-end 1,524,562 1,249,617 985,149
- ---------------------------------------------------------------------------------
Available for future
grants of stock options 5,608,441 6,501,750 7,250,900
OPTION PRICE PER SHARE
Outstanding $14.06 - 74.00 $10.64-51.25 $ 9.28-49.06
Exercised $10.64 - 51.25 $ 9.28-49.06 $ 9.28-43.72
Granted $53.75 - 74.00 $47.50-51.25 $44.63-49.06
- ---------------------------------------------------------------------------------
</TABLE>
In 1995, the Company offered its option holders of non-qualified stock
options the opportunity to receive replacement options on a one-for-one basis.
This program is designed to encourage ownership of CPC stock. During 1995,
47,009 shares were issued under this arrangement.
In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement 123, "Accounting for Stock-Based Compensation," which will allow
companies, beginning in 1996, to either retain APB Opinion 25 for recognizing
expense for stock-based compensation, or adopt a new accounting method based on
estimated fair value. The Company has decided to continue to follow APB 25 and
describe the impact of using an estimated fair value approach on a pro forma
basis in footnote disclosure.
In addition to stock options, 70,300 shares were awarded to employees in 1995
under the restricted stock award provision of the 1993 plan. The cost of these
awards is being amortized over the five-year restriction period.
At December 31, 1995, 24,507 shares of common stock in treasury were reserved
for deferred compensation programs.
================================================================================
SUPPLEMENTARY BALANCE SHEET AND INCOME STATEMENT INFORMATION
Supplementary Balance Sheet and Income Statement information is set forth below:
<TABLE>
<CAPTION>
$ Millions 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
ACCOUNTS RECEIVABLE -- NET
Accounts receivable-- trade $ 1,234 $ 1,026
Accounts receivable-- other 103 100
Allowance for doubtful accounts (44) (33)
- -------------------------------------------------------------------------------
Total accounts receivable -- net 1,293 1,093
- -------------------------------------------------------------------------------
INVENTORIES
Finished and in process 602 559
Raw materials 248 207
Manufacturing supplies 161 122
- -------------------------------------------------------------------------------
Total inventories 1,011 888
- -------------------------------------------------------------------------------
ACCRUED LIABILITIES
Marketing expenses 103 91
Compensation expenses 128 105
Restructuring provision / integration 84 57
Taxes payable other than taxes on income 61 55
Dividends payable 55 53
Other 484 356
- -------------------------------------------------------------------------------
Total accrued liabilities 915 717
- -------------------------------------------------------------------------------
NONCURRENT LIABILITIES
Employees' pension, indemnity,
retirement, and related provisions 554 523
Other noncurrent liabilities 353 287
- -------------------------------------------------------------------------------
Total noncurrent liabilities $ 907 $ 810
- -------------------------------------------------------------------------------
</TABLE>
<PAGE> 30
1995 ANNUAL REPORT 32
<TABLE>
<CAPTION>
$ Millions 1995 1994 1993
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
DEPRECIATION EXPENSE $ 285 $ 259 $ 242
AMORTIZATION EXPENSE 37 29 24
RESEARCH AND DEVELOPMENT COST 70 58 49
- -------------------------------------------------------------------------------
INTEREST EXPENSE -- NET
Interest expense 143 107 110
Interest expense capitalized (7) (6) (7)
Interest income (13) (9) (13)
- -------------------------------------------------------------------------------
Interest expense-- net $ 123 $ 92 $ 90
- -------------------------------------------------------------------------------
</TABLE>
================================================================================
OPERATIONS BY BUSINESS SEGMENT AND GEOGRAPHIC AREA
Information concerning operations by business segment and geographic area
appears on pages 44 and 45.
================================================================================
INCOME TAXES
Income before income taxes and the components of the provision for income taxes
are shown below:
<TABLE>
<CAPTION>
$ Millions 1995 1994 1993
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Income before income taxes:
United States $ 349 $ 285 $ 358
Outside the United States 528 330 432
- -------------------------------------------------------------------------------
Total $ 877 $ 615 $ 790
- -------------------------------------------------------------------------------
Provision for income taxes:
Current tax expense
U.S. Federal $ 141 $ 126 $ 125
State and local 27 26 25
Foreign 110 145 189
- -------------------------------------------------------------------------------
Total current 278 297 339
- -------------------------------------------------------------------------------
Deferred tax expense (benefit)
U.S. Federal (11) (20) 8
State and local (2) (5) 1
Foreign 73 (29) (32)
- -------------------------------------------------------------------------------
Total deferred 60 (54) (23)
- -------------------------------------------------------------------------------
Total provision $ 338 $ 243 $ 316
- -------------------------------------------------------------------------------
</TABLE>
The tax effects of significant temporary differences which comprise the deferred
tax liabilities and assets at December 31, 1995, and 1994, are as follows:
<TABLE>
<CAPTION>
$ Millions 1995 1994
- -------------------------------------------------------------------------------
<S> <C> <C>
Plants and properties $ 250 $ 222
Inventory 20 20
Pensions 43 47
- -------------------------------------------------------------------------------
Gross deferred tax liabilities 313 289
- -------------------------------------------------------------------------------
Restructuring reserves 11 43
Environmental reserves 44 46
Employee benefit reserves 136 138
Unrealized exchange losses 61 58
Other 66 37
- -------------------------------------------------------------------------------
Gross deferred tax assets 318 322
- -------------------------------------------------------------------------------
Valuation allowance (8) (2)
Total deferred tax liabilities (assets) $ 3 $ (31)
- -------------------------------------------------------------------------------
</TABLE>
Total net deferred tax liabilities and assets shown above included current and
noncurrent elements.
A reconciliation of the federal statutory tax rate to the Company's effective
tax rate follows:
<TABLE>
<CAPTION>
1995 1994 1993
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Provision for tax at U.S. statutory rate 35.0% 35.0% 35.0%
Additional taxes related to foreign income 2.1 1.6 2.7
State and local taxes-- net 1.8 2.3 2.2
Other items-- net (0.4) 0.6 0.1
- ----------------------------------------------------------------------------------
Provision at effective tax rate 38.5% 39.5% 40.0%
- ----------------------------------------------------------------------------------
</TABLE>
Taxes that would result from dividend distributions by foreign subsidiaries
to the U.S. are provided to the extent dividends are anticipated. Retained
earnings of the Company included, as of December 31, 1995, approximately $727
million of retained earnings of foreign subsidiaries which are indefinitely
retained by the subsidiaries for capital and operating requirements.
<PAGE> 31
33 CPC INTERNTIONAL INC.
BUSINESS SEGMENT FINANCIAL INFORMATION
CPC International Inc. and Subsidiaries
<TABLE>
<CAPTION>
$ Millions 1995 1994 1993
===========================================================================
<S> <C> <C> <C>
SALES TO UNAFFILIATED CUSTOMERS
Consumer foods $ 6,524 $ 5,782 $ 5,222
Baking 675 421 414
Corn refining 1,233 1,222 1,102
- ---------------------------------------------------------------------------
8,432 7,425 6,738
- ---------------------------------------------------------------------------
SALES INTERSEGMENT
Consumer foods 1 1 --
Baking 13 13 13
Corn refining 157 163 140
- ---------------------------------------------------------------------------
171 177 153
- ---------------------------------------------------------------------------
OPERATING INCOME
Consumer foods 800 (1) 562 (3) 699
Baking (14)(2) (10)(3) 25
Corn refining 251 (1) 188 (3) 182
Corporate expenses (30) (28) (23)
- ---------------------------------------------------------------------------
1,007 712 883
- ---------------------------------------------------------------------------
ASSETS AT DECEMBER 31
Consumer foods 4,898 4,224 3,652
Baking 1,180 175 199
Corn refining 1,208 1,121 1,024
Corporate 216 148 186
- ---------------------------------------------------------------------------
7,502 5,668 5,061
- ---------------------------------------------------------------------------
DEPRECIATION AND AMORTIZATION
Consumer foods 213 187 167
Baking 23 18 18
Corn refining 83 80 78
Corporate 3 3 3
- ---------------------------------------------------------------------------
322 288 266
- ---------------------------------------------------------------------------
CAPITAL EXPENDITURES
Consumer foods 253 233 232
Baking 34 15 16
Corn refining 183 129 138
Corporate -- -- --
- ---------------------------------------------------------------------------
470 377 386
===========================================================================
</TABLE>
Intersegment sales generally are priced with reference to prevailing market
prices.
(1) Includes restructuring charge of $60 million for consumer foods and $15
million for corn refining and the gain from sale of businesses of $52
million in corn refining and $20 million in consumer foods.
(2) Includes integration charge of $55 million.
(3) Includes restructuring charge of $175 million for consumer foods, $33
million for baking business, and $19 million for corn refining.
<PAGE> 32
1995 ANNUAL REPORT 34
GEOGRAPHIC FINANCIAL INFORMATION
CPC International Inc. and Subsidiaries
<TABLE>
<CAPTION>
$ Millions 1995 1994 1993
===============================================================================
<S> <C> <C> <C>
SALES TO UNAFFILIATED CUSTOMERS
United States $ 2,885 $ 2,645 $ 2,412
Canada 305 262 246
- -------------------------------------------------------------------------------
North America 3,190 2,907 2,658
Europe 3,438 2,933 2,623
Latin America 1,381 1,273 1,178
Asia 423 312 279
- -------------------------------------------------------------------------------
8,432 7,425 6,738
- -------------------------------------------------------------------------------
SALES INTERAREA
United States 63 47 28
Canada 52 71 72
- -------------------------------------------------------------------------------
North America 115 118 100
Europe 9 6 8
Latin America 12 8 7
Asia 1 2 1
- -------------------------------------------------------------------------------
137 134 116
- -------------------------------------------------------------------------------
OPERATING INCOME
United States 378(1,2) 321 (3) 376
Canada 54 23 (3) 27
- -------------------------------------------------------------------------------
North America 432 344 403
Europe 327(1) 181 (3) 268
Latin America 221(1) 166 (3) 182
Asia 57 49 (3) 53
Corporate expenses (30) (28) (23)
- -------------------------------------------------------------------------------
1,007 712 883
- -------------------------------------------------------------------------------
ASSETS AT DECEMBER 31
United States 2,662 1,666 1,585
Canada 255 243 250
- -------------------------------------------------------------------------------
North America 2,917 1,909 1,835
Europe 3,110 2,508 2,076
Latin America 946 859 768
Asia 313 244 196
Corporate 216 148 186
- -------------------------------------------------------------------------------
7,502 5,668 5,061
===============================================================================
</TABLE>
Interarea sales generally are priced with reference to prevailing market prices.
(1) Includes restructuring charges of $18 million for U.S., $29 million for
Europe, and $28 million for Latin America, which was offset by gains of $52
million for U.S. and $20 million for Latin America.
(2) Includes an integration charge of $55 million.
(3) Includes restructuring charge of $65 million for U.S.; $10 million for
Canada; $120 million for Europe; $25 million for Latin America; and $7
million for Asia.
<PAGE> 33
35 CPC INTERNATIONAL INC.
ELEVEN-YEAR FINANCIAL HIGHLIGHTS
CPC International Inc. and Subsidiaries
<TABLE>
<CAPTION>
$ Millions except per share amounts 1995 1994 1993 1992
========================================================================================================================
<S> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------
Net sales $ 8,432 $ 7,425 $ 6,738 $ 6,599
- ------------------------------------------------------------------------------------------------------------------------
Earnings for the year 512 (1) 345 (2) 454 224(3,4)
- ------------------------------------------------------------------------------------------------------------------------
Earnings per common share 3.43 (1) 2.25 (2) 2.95 1.41(3,4)
- ------------------------------------------------------------------------------------------------------------------------
Average number of common shares outstanding 146 148 150 151
- ------------------------------------------------------------------------------------------------------------------------
Dividends declared per common share 1.48 1.38 1.28 1.20
- ------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
- ------------------------------------------------------------------------------------------------------------------------
Working capital $ (489) $ 108 $ 389 $ 347
- ------------------------------------------------------------------------------------------------------------------------
Plants and properties-- net 2,898 2,300 2,121 2,111
- ------------------------------------------------------------------------------------------------------------------------
Total assets 7,502 5,668 5,061 5,171
- ------------------------------------------------------------------------------------------------------------------------
Long-term debt 1,333 879 898 953
- ------------------------------------------------------------------------------------------------------------------------
Short-term debt 1,399 664 374 497
- ------------------------------------------------------------------------------------------------------------------------
Total debt 2,732 1,543 1,272 1,450
- ------------------------------------------------------------------------------------------------------------------------
Translation adjustment included in stockholders' equity (163) (181) (173) (56)
- ------------------------------------------------------------------------------------------------------------------------
Stockholders' equity 1,987 1,749 1,769 1,662
- ------------------------------------------------------------------------------------------------------------------------
Stockholders' equity per share 13.65 11.92 11.81 11.03
- ------------------------------------------------------------------------------------------------------------------------
Shares outstanding, year-end 146 147 150 151
- ------------------------------------------------------------------------------------------------------------------------
STATISTICAL DATA
- ------------------------------------------------------------------------------------------------------------------------
Capital expenditures $ 470 $ 377 $ 386 $ 311
- ------------------------------------------------------------------------------------------------------------------------
Maintenance and repairs 247 219 196 203
- ------------------------------------------------------------------------------------------------------------------------
Advertising expenses 564 500 463 483
- ------------------------------------------------------------------------------------------------------------------------
Rental expense for operating leases 79 76 63 65
- ------------------------------------------------------------------------------------------------------------------------
Total employee costs 1,616 1,389 1,280 1,203
========================================================================================================================
</TABLE>
QUARTERLY FINANCIAL DATA
<TABLE>
<CAPTION>
==========================================================================================
(Unaudited)
$ Millions except per share amounts 1st Q 2nd Q 3rd Q 4th Q
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995
Market price range of common stock
High $ 57 1/8 $ 62 5/8 $ 68 1/8 $ 74 1/2
Low 51 5/8 54 1/8 58 64 1/2
Close 54 1/8 61 3/4 66 68 5/8
- ------------------------------------------------------------------------------------------
Dividends declared per common share $ .36 $ .36 $ .38 $ .38
- ------------------------------------------------------------------------------------------
Quarterly results
Net sales $1,955 $2,040 $2,046 $2,391
Gross profit 782 817 803 966
Net income 111 142 142 (1) 117 (1)
Earnings per common share $ .73 $ .96 $ .95 (1) $ .79 (1)
==========================================================================================
</TABLE>
See notes to consolidated financial statements.
(1) Includes a fourth-quarter integration charge of $34 million after taxes or
$.23 per common share; and other charges -- net of $2 million after taxes or
$.01 per common share recorded in the third quarter.
(2) Includes restructuring charge of $137 million after taxes or $.92 per common
share recorded in the second quarter.
(3) Includes the cumulative effect to January 1, 1992, of changes in accounting
principles of $160 million after taxes or $1.06 per common share, and the
effects of these changes in 1992 of $13 million, $8 million after taxes or
$.05 per common share.
<PAGE> 34
1995 ANNUAL REPORT 36
<TABLE>
<CAPTION>
$ Millions except per share amounts 1991 1990 1989 1988 1987 1986 1985
==============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY OF OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net sales $ 6,189 $ 5,781 $ 5,103 $ 4,700 $ 4,903 $ 4,549 $ 4,210
- ------------------------------------------------------------------------------------------------------------------------------
Earnings for the year 373(5) 374 328 289 355(6) 219 142(7)
- ------------------------------------------------------------------------------------------------------------------------------
Earnings per common share 2.40(5) 2.41 2.11 1.84 2.17(6) 1.15 .73(7)
- ------------------------------------------------------------------------------------------------------------------------------
Average number of common shares outstanding 151 151 155 157 163 191 194
- ------------------------------------------------------------------------------------------------------------------------------
Dividends declared per common share 1.10 1.00 .87 .76 .64 .56 .55
- ------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA
- ------------------------------------------------------------------------------------------------------------------------------
Working capital $ 432 $ 160 $ 231 $ 98 $ 346 $ (186) $ 310
- ------------------------------------------------------------------------------------------------------------------------------
Plants and properties-- net 1,881 1,898 1,739 1,688 1,638 1,992 1,633
- -------------------------------------------------------------------------------------------------------------------------------
Total assets 4,510 4,490 3,705 3,342 3,261 3,651 3,017
- -------------------------------------------------------------------------------------------------------------------------------
Long-term debt 1,016 990 845 589 776 807 495
- -------------------------------------------------------------------------------------------------------------------------------
Short-term debt 366 595 355 375 166 736 254
- -------------------------------------------------------------------------------------------------------------------------------
Total debt 1,382 1,585 1,200 964 942 1,543 749
- -------------------------------------------------------------------------------------------------------------------------------
Translation adjustment included in stockholders' equity (80) (42) (69) (80) (90) (84) (173)
- -------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity 1,631 1,453 1,218 1,195 1,087 956 1,372
- -------------------------------------------------------------------------------------------------------------------------------
Stockholders' equity per share 10.78 9.63 8.05 7.63 6.81 5.79 7.05
- ------------------------------------------------------------------------------------------------------------------------------
Shares outstanding, year-end 151 151 151 157 160 165 194
- ------------------------------------------------------------------------------------------------------------------------------
STATISTICAL DATA
- ------------------------------------------------------------------------------------------------------------------------------
Capital expenditures $ 277 $ 262 $ 215 $ 226 $ 258 $ 361 $ 424
- ------------------------------------------------------------------------------------------------------------------------------
Maintenance and repairs 176 169 156 152 198 174 137
- ------------------------------------------------------------------------------------------------------------------------------
Advertising expenses 454 418 367 316 293 230 206
- -------------------------------------------------------------------------------------------------------------------------------
Rental expense for operating leases 61 48 42 41 48 39 34
- ------------------------------------------------------------------------------------------------------------------------------
Total employee costs 1,096 1,005 871 836 923 807 705
==============================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
============================================================================================
(Unaudited)
$ Millions except per share amounts 1st Q 2nd Q 3rd Q 4th Q
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994
Market price range of common stock
High $ 50 1/2 $ 51 7/8 $ 54 1/2 $ 55 5/8
Low 45 1/4 44 1/4 47 1/2 49 5/8
Close 47 3/8 48 1/4 50 5/8 53 1/4
- --------------------------------------------------------------------------------------------
Dividends declared per common share $ .34 $ .34 $ .34 $ .36
- --------------------------------------------------------------------------------------------
Quarterly results
Net sales $1,738 $1,856 $1,813 $2,018
Gross profit 675 716 702 836
Net income (loss) 98 (15)(2) 125 137
Earnings per common share $ .63 $ (.11)(2) $ .83 $ .90
============================================================================================
</TABLE>
(4) Includes an environmental charge related to discontinued operations of $47
million after taxes or $.31 per common share.
(5) Includes an environmental charge related to discontinued operations of $32
million after taxes or $.21 per common share.
(6) Includes special gain from sale of businesses of $126 million after taxes or
$.77 per common share.
(7) Includes restructuring charge of $38 million after taxes or $.20 per common
share.
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
Following is a list of the Registrant's subsidiaries and their
subsidiaries showing the percentage of voting securities owned, or other bases
of control, by the immediate parent of each.
<TABLE>
<CAPTION>
Percentage of
voting securi-
ties owned by
its immediate
parent
--------------
<S> <C> <C>
CPC International Inc.
(a)Subsidiaries included in the Company's
consolidated financial statements
United States
-------------
Arnold Foods Company, Inc. (Delaware) 100.00
Best Foods - Caribbean, Inc. (Delaware) 100.00
CPC Europe (Group) Ltd. (Delaware) 100.00
Entenmann's Inc. (Delaware)
(Owned by CPC Baking Co., Inc., a holding company of
CPC) 100.00
Henri's Food Products Co., Inc. (Wisconsin) 100.00
S. B. Thomas, Inc. (New York) 100.00
Canada
------
Canada Starch Company Inc. 100.00
Europe(1)
------
C.H. Knorr Nahrungsmittelfabrik
Ges.mbH - Austria 100.00
CPC Monda N.V./S.A. - Belgium 99.90
CPC Foods A.S. - Czech Republic 87.77
CPC Foods A/S - Denmark 100.00
CPC Foods OY - Finland 100.00
CPC France S.A. - France 99.84
CPC Maizena GmbH - Germany 100.00
CPC (Hellas) A.B.E.E. - Greece 100.00
CPC Benelux B.V. - Holland 100.00
CPC Hungary RT - Hungary 100.00
CPC Foods (Ireland) Ltd. - Ireland 100.00
CPC Italia S.P.A. - Italy 90.19
CPC Foods A/S - Norway 100.00
CPC Amino S.A. - Poland 99.96
Knorr Portuguesa-Produtos
Alimentares S.A. - Portugal 100.00
CPC Espana, S.A. - Spain 100.00
CPC Foods AB - Sweden 100.00
CPC Knorr Holding AG - Switzerland 100.00
CPC (United Kingdom) Ltd. - United Kingdom 100.00
Africa and Middle East(1)
----------------------
Israel Edible Products Ltd. "TAMI" - Israel 51.00
CPC Kenya Ltd. - Kenya 100.00
CPC Maghreb, S.A. - Morocco 100.00
CPC Tongaat Foods (Pty) Ltd. - South Africa 50.00(2)
</TABLE>
16
<PAGE> 2
<TABLE>
<S> <C> <C>
Latin America
-------------
Refinerias de Maiz S.A.I.C. - Argentina 100.00
Refinacoes de Milho, Brasil Ltda. - Brazil 100.00
Industrias de Maiz y Alimentos S.A. - Chile 100.00
Industrias del Maiz S.A. - Colombia 100.00
Maizena de Costa Rica S.A. - Costa Rica 100.00
Productos de Maiz y Alimentos S.A. - Guatemala 100.00
Productos de Maiz, S.A. de C.V. - Mexico 100.00
Alimentos y Productos de Maiz, S.A. - Peru 99.40
Industrializadora de Maiz, S.A. - Uruguay 100.00
Aliven S.A. - Venezuela 100.00
Asia
----
CPC (Guangzhou) Foods Ltd. - China 80.00
(Owned by CPC Asia Investments Ltd.,
a holding company of CPC)
CPC/AJI (Hong Kong) Ltd. - Hong Kong 50.00(2)
P.T. Knorr Indonesia - Indonesia 100.00
CPC/AJI (Malaysia) Sdn. Berhad - Malaysia 50.00(2)
Rafhan Maize Products Co. Ltd. - Pakistan 51.00(1)
California Manufacturing Co., Inc. - Philippines 50.00(2)
CPC/AJI (Singapore) Pte. Ltd. - Singapore 50.00(2)
CPC/AJI (Taiwan) Ltd. - Taiwan 50.00(2)
CPC/AJI (Thailand) Ltd. - Thailand 50.00(2)
Best Foods Miwon Ltd. - South Korea 50.00
</TABLE>
The names of forty-four (44) domestic subsidiaries and one hundred-thirty
six (136) international subsidiaries have been omitted since these unnamed
subsidiaries considered in the aggregate as a single entity do not
constitute a significant subsidiary.
(b) Domestic subsidiary not consolidated:
One (1) wholly-owned subsidiary which has minor real estate
holdings.
(c) International subsidiaries not consolidated:
Five (5) international subsidiaries of which all or a majority of
the share capital is owned by the Registrant.
(d) Domestic 50% owned company
Two (2) joint ventures in which the Registrant owns 50% interest
with 50% being owned by single other interests.
(e) International subsidiaries 50% and less not consolidated:
One (1) company in which the Registrant owns 50% of the voting
securities with 50% of such securities being held by single other
interests. One (1) company in which the Registrant owns 47.7% of
the voting securities with 52.3% of such securities being held by
single other interests.
- -----------------
(1) Owned by CPC Europe (Group) Ltd., or its wholly-owned subsidiaries.
(2) Owned fractionally more than 50% and fully consolidated for accounting
purposes.
17
<PAGE> 3
If the companies included in (b), (c), (d) and (e) were considered in the
aggregate as a single entity, they would not constitute a significant
subsidiary since: (1) the assets of the subsidiaries, or the investments in
and advances to the subsidiaries by its parent and the parent's other
subsidiaries, if any, did not exceed 10 percent of the assets of the parent and
its subsidiaries on a consolidated basis, and (2) the sales and operating
revenues of the parent and its subsidiaries on a consolidated basis, and the
Company's equity in their income before income taxes and extraordinary items
did not exceed 10 percent of the income of the parent and its subsidiaries on a
consolidated basis.
18
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
CPC International Inc.:
We consent to incorporation by reference in the Registration Statements on
Forms S-8 (No. 2-48849, 2-92248 and 33-49847) and on Forms S-3 (No. 33-30813,
33-28989, 33-40759, 33-52213 and 33-65171) of CPC International Inc. of our
report dated February 5, 1996, relating to the consolidated balance sheets of
CPC International Inc. and Subsidiaries as of December 31, 1995 and 1994, 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, 1995 which report appears in the December 31, 1995 annual report
on Form 10-K of CPC International Inc.
/S/ KPMG Peat Marwick LLP
-------------------------
(KPMG Peat Marwick LLP)
New York, New York
March 19, 1996
19
<PAGE> 1
==============================================================================
POWER OF ATTORNEY
Form 10-K for the Fiscal Year Ended December 31, 1995
==============================================================================
KNOW ALL MEN BY THESE PRESENTS, that I, a director of CPC International
Inc., a Delaware corporation, (the "Company"), do hereby constitute and appoint
CLIFFORD B. STORMS and JOHN B. MEAGHER, and each of them, as my true and
lawful attorney-in-fact and agent, for me and in my name, place and stead, to
sign the Annual Report and Form 10-K of the Company for the fiscal year ended
December 31, 1995 and any and all amendments thereto, and to file the same and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
the premises, as fully to all intents and purposes as I might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have executed this instrument this 19th day of
March, 1996.
/s/ T.H. Black
-----------------------
T.H. BLACK
<PAGE> 2
==============================================================================
POWER OF ATTORNEY
Form 10-K for the Fiscal Year Ended December 31, 1995
==============================================================================
KNOW ALL MEN BY THESE PRESENTS, that I, a director of CPC International
Inc., a Delaware corporation, (the "Company"), do hereby constitute and appoint
CLIFFORD B. STORMS and JOHN B. MEAGHER, and each of them, as my true and
lawful attorney-in-fact and agent, for me and in my name, place and stead, to
sign the Annual Report and Form 10-K of the Company for the fiscal year ended
December 31, 1995 and any and all amendments thereto, and to file the same and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
the premises, as fully to all intents and purposes as I might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have executed this instrument this 19th day of
March, 1996.
/s/ Alfred C. Decrane, Jr.
---------------------------
ALFRED C. DECRANE, JR.
<PAGE> 3
==============================================================================
POWER OF ATTORNEY
Form 10-K for the Fiscal Year Ended December 31, 1995
==============================================================================
KNOW ALL MEN BY THESE PRESENTS, that I, a director of CPC International
Inc., a Delaware corporation, (the "Company"), do hereby constitute and appoint
CLIFFORD B. STORMS and JOHN B. MEAGHER, and each of them, as my true and
lawful attorney-in-fact and agent, for me and in my name, place and stead, to
sign the Annual Report and Form 10-K of the Company for the fiscal year ended
December 31, 1995 and any and all amendments thereto, and to file the same and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
the premises, as fully to all intents and purposes as I might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have executed this instrument this 19th day of
March, 1996.
/s/ W. C. Ferguson
-----------------------
W. C. FERGUSON
<PAGE> 4
==============================================================================
POWER OF ATTORNEY
Form 10-K for the Fiscal Year Ended December 31, 1995
==============================================================================
KNOW ALL MEN BY THESE PRESENTS, that I, a director of CPC International
Inc., a Delaware corporation, (the "Company"), do hereby constitute and appoint
CLIFFORD B. STORMS and JOHN B. MEAGHER, and each of them, as my true and
lawful attorney-in-fact and agent, for me and in my name, place and stead, to
sign the Annual Report and Form 10-K of the Company for the fiscal year ended
December 31, 1995 and any and all amendments thereto, and to file the same and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
the premises, as fully to all intents and purposes as I might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have executed this instrument this 19th day of
March, 1996.
/s/ R. J. Gillespie
-----------------------
R. J. GILLESPIE
<PAGE> 5
==============================================================================
POWER OF ATTORNEY
Form 10-K for the Fiscal Year Ended December 31, 1995
==============================================================================
KNOW ALL MEN BY THESE PRESENTS, that I, a director of CPC International
Inc., a Delaware corporation, (the "Company"), do hereby constitute and appoint
CLIFFORD B. STORMS and JOHN B. MEAGHER, and each of them, as my true and
lawful attorney-in-fact and agent, for me and in my name, place and stead, to
sign the Annual Report and Form 10-K of the Company for the fiscal year ended
December 31, 1995 and any and all amendments thereto, and to file the same and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
the premises, as fully to all intents and purposes as I might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have executed this instrument this 19th day of
March, 1996.
/s/ Ellen R. Gordon
-----------------------
ELLEN R. GORDON
<PAGE> 6
==============================================================================
POWER OF ATTORNEY
Form 10-K for the Fiscal Year Ended December 31, 1995
==============================================================================
KNOW ALL MEN BY THESE PRESENTS, that I, a director of CPC International
Inc., a Delaware corporation, (the "Company"), do hereby constitute and appoint
CLIFFORD B. STORMS and JOHN B. MEAGHER, and each of them, as my true and
lawful attorney-in-fact and agent, for me and in my name, place and stead, to
sign the Annual Report and Form 10-K of the Company for the fiscal year ended
December 31, 1995 and any and all amendments thereto, and to file the same and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
the premises, as fully to all intents and purposes as I might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have executed this instrument this 19th day of
March, 1996.
/s/ George V. Grune
---------------------------
GEORGE V. GRUNE
<PAGE> 7
==============================================================================
POWER OF ATTORNEY
Form 10-K for the Fiscal Year Ended December 31, 1995
==============================================================================
KNOW ALL MEN BY THESE PRESENTS, that I, a director of CPC International
Inc., a Delaware corporation, (the "Company"), do hereby constitute and appoint
CLIFFORD B. STORMS and JOHN B. MEAGHER, and each of them, as my true and
lawful attorney-in-fact and agent, for me and in my name, place and stead, to
sign the Annual Report and Form 10-K of the Company for the fiscal year ended
December 31, 1995 and any and all amendments thereto, and to file the same and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
the premises, as fully to all intents and purposes as I might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have executed this instrument this 19th day of
March, 1996.
/s/ Leo I. Higdon, Jr.
-----------------------
LEO I. HIGDON, JR.
<PAGE> 8
==============================================================================
POWER OF ATTORNEY
Form 10-K for the Fiscal Year Ended December 31, 1995
==============================================================================
KNOW ALL MEN BY THESE PRESENTS, that I, a director of CPC International
Inc., a Delaware corporation, (the "Company"), do hereby constitute and appoint
CLIFFORD B. STORMS and JOHN B. MEAGHER, and each of them, as my true and
lawful attorney-in-fact and agent, for me and in my name, place and stead, to
sign the Annual Report and Form 10-K of the Company for the fiscal year ended
December 31, 1995 and any and all amendments thereto, and to file the same and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
the premises, as fully to all intents and purposes as I might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have executed this instrument this 19th day of
March, 1996.
/s/ Richard G. Holder
-----------------------
RICHARD G. HOLDER
<PAGE> 9
==============================================================================
POWER OF ATTORNEY
Form 10-K for the Fiscal Year Ended December 31, 1995
==============================================================================
KNOW ALL MEN BY THESE PRESENTS, that I, a director of CPC International
Inc., a Delaware corporation, (the "Company"), do hereby constitute and appoint
CLIFFORD B. STORMS and JOHN B. MEAGHER, and each of them, as my true and
lawful attorney-in-fact and agent, for me and in my name, place and stead, to
sign the Annual Report and Form 10-K of the Company for the fiscal year ended
December 31, 1995 and any and all amendments thereto, and to file the same and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
the premises, as fully to all intents and purposes as I might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have executed this instrument this 19th day of
March, 1996.
/s/ Eileen S. Kraus
-----------------------
EILEEN S. KRAUS
<PAGE> 10
==============================================================================
POWER OF ATTORNEY
Form 10-K for the Fiscal Year Ended December 31, 1995
==============================================================================
KNOW ALL MEN BY THESE PRESENTS, that I, a director of CPC International
Inc., a Delaware corporation, (the "Company"), do hereby constitute and appoint
CLIFFORD B. STORMS and JOHN B. MEAGHER, and each of them, as my true and
lawful attorney-in-fact and agent, for me and in my name, place and stead, to
sign the Annual Report and Form 10-K of the Company for the fiscal year ended
December 31, 1995 and any and all amendments thereto, and to file the same and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
the premises, as fully to all intents and purposes as I might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have executed this instrument this 19th day of
March, 1996.
/s/ Alain Labergere
---------------------------
ALAIN LABERGERE
<PAGE> 11
==============================================================================
POWER OF ATTORNEY
Form 10-K for the Fiscal Year Ended December 31, 1995
==============================================================================
KNOW ALL MEN BY THESE PRESENTS, that I, a director of CPC International
Inc., a Delaware corporation, (the "Company"), do hereby constitute and appoint
CLIFFORD B. STORMS and JOHN B. MEAGHER, and each of them, as my true and
lawful attorney-in-fact and agent, for me and in my name, place and stead, to
sign the Annual Report and Form 10-K of the Company for the fiscal year ended
December 31, 1995 and any and all amendments thereto, and to file the same and
other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
the premises, as fully to all intents and purposes as I might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact may
lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, I have executed this instrument this 19th day of
March, 1996.
/s/ William S. Norman
-----------------------
WILLIAM S. NORMAN
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from (a) Annual
Report and is qualified in its entirety by reference to such (b) Exhibit 13
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 203
<SECURITIES> 0
<RECEIVABLES> 1,234
<ALLOWANCES> 44
<INVENTORY> 1,011
<CURRENT-ASSETS> 2,577
<PP&E> 5,408
<DEPRECIATION> 2,510
<TOTAL-ASSETS> 7,502
<CURRENT-LIABILITIES> 3,066
<BONDS> 1,333
0
190
<COMMON> 49
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,502
<SALES> 8,432
<TOTAL-REVENUES> 0
<CGS> 5,064
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 123
<INCOME-PRETAX> 877
<INCOME-TAX> 338
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 512
<EPS-PRIMARY> 3.43
<EPS-DILUTED> 0
</TABLE>
